Executive summery

This assignment is made on the McDonalds retail marketing in India. In this assignment i discuss about McDonalds origin, their market position, in how many countries they are operating their business, how much consumer they are serving, business situation of McDonalds in India, what is McDonalds market position in India, what are their business opportunities, what about their competitive situation. Then i tried to analyze three major task.

At first, i discuss about the elements of the retail mix. Here i discuss about the six elements of retail mix and these elements include product, price, place, promotion, personnel and presentation. I also give my opinion about how these six elements give competitive advantage to McDonalds in operating their business in India.

In the second task, I gave a definition of competitive advantage and sustainable competitive advantage. I analyze four criteria of sustainable competitive advantage. These criteria are customer benefit, unique, sustainable, and profitable. Then i show the strong and weakness of each element of retail mix. In this task, i also briefly discuss about some elements that are basis for the sustainable competitive advantage.

In the third task, i analyze and evaluate the factors that are facing by McDonalds when they enter in the Indian market as a non-domestic retailer. We called McDonalds as a non-domestic retailer because it is not an Indian company, McDonalds is a USA origin company. Under this task I discuss about PEST factors, then i make competitive analysis, identify their growth objective and growth strategy and at last i also show how they have entered in the Indian market

1 Introduction

McDonalds was first introduced in USA in 1940 by Richard and Maurice McDonald. McDonalds are operating their business around 119 countries and they have 35000 outlets around the world. McDonalds are in the second position according to the BBC report 2012 based on the employee involvement. 1.9 million People work for the McDonalds. They offered only fast food items like burger, hamburger, sandwich, pizza etc. McDonalds launched its business in India in 1996 as a retail marketer. Retail marketing can be defined as the activities of selling consumer goods at a small portion to the consumer. They face many problems when they entered in the Indian market because of cultural diversity between American culture and Indian culture. Large portions of the Indian consumers are vegetarian. Therefore, they seek fast foods that are made from vegetables. McDonalds ensure that there is no use of beef and pork's. In any item of their menu to attract the customer. Side by side, they also overcome many political, social, cultural barriers by using their strategies and through franchising. Although it starts its business since1996 now it has more than 250 outlets around the whole country and dominating fast food retailing business.

2 Task 1

2.1 The analysis of marketing mix of McDonalds.

Every retailer has to deal with all the elements of retail mix. These elements are given below

Ø Product

Ø Price

Ø Place

Ø Promotion

Ø Personnel and

Ø Presentation

Now I am going to analyze how McDonalds handle all of these retail mix elements and what competitive advantage they get from the retail mix

2.1.1 Merchandise range and assortment in the India

It is provide various fast food items to the target audience of India. In India, they try to catch the middle class and a higher middle class person that's why they are always try to deliver quality products at a low price. They offer wide range of fast food items that can be called as the depth of McDonalds

Depth Product range of McDonalds in India

Ø Hamburgers

Ø Cheeseburgers

Ø Chicken

Ø French fries

Ø Breakfast items

Ø Soft drinks

Ø Milkshakes

Ø Salads

Ø Fish

Ø Smoothies

Ø Fruit

Ø Seasoned fries

Breadth product range of McDonalds

McDonalds not only deliver its product but also some other brands fast food items also deliver to the customer. These brands are

Ø Piles Café.

Ø Chipotle Mexican Grill

Ø Donatos Pizza.

Various fast food items of these various brands are offered to the consumer by McDonalds for different taste and preference of the customer.

Competitive advantage of McDonalds

McDonalds get so much benefit than other competitors such as from KFC. KFC also provide wide range of product to the consumer but they charge higher price that why consumer often choose McDonalds foods because only in this store they get quality food at a reasonable price.

Product life cycle stage of McDonalds

1. Development stage: In this stage, McDonalds made many preliminary plan about how they introduced their product in the market and what will be their pricing strategy and what about their quality.

2. Introduction stage: in this stage, they actually introduce their product in the market. In this stage, this company tries to capture the market by delivering quality food at relatively low cost than the customer. In this stage number of consumer gradually increasing.

3. Growth: McDonalds already crossed it growth stage because now it is well known around the whole world.

4. Maturity: McDonalds is now in the maturity stage. They have to face a stiff competition in the market to retain their market position. Now they operate their business globally.

5. Decline: Till now they are not fully face the challenge of decline stage because they always delivering the product according to the customer need, wants, and demand.

Assortment and merchandise strategy

To capture the Indian market and to retain their leading position in that market they provide a wide range of product at a reasonable price as assortment and merchandise strategy.

2.1.2 Retail communications in the India

McDonalds follow various promotional tools for their retail communication with the consumer. These communications can be classified as two major parts. These are

Store based: some store base communication tools are discussed briefly in below

· POS display: food items of the company are displayed to the consumers who are visiting McDonalds.

· Personal selling: under this, all the personnel who work for the companies they deliver different information to induce people to buy the product.

· In store advertising: under this tool, various messages related with the company's products and offerings are delivered in store to the customer.

· The retail sale: McDonalds set various promotional prices to motivate consumer to consume their products. They set these types of price for a certain period.

Market based: various market based promotional tools are given below:

· Advertising: Through newspaper, television, magazine McDonalds provide messages to the target audience

· Sales promotion: they use various short-term incentives to induce people to buy their product such as discount.

· Direct marketing: they provide direct promotional message to the consumer through email.

· Sponsorship: to capture the consumer interest they sponsor various events such as FIFA world cup.

· Social media: McDonalds also use various forms of social media to deliver promotional messages such as Facebook, twitter.

Competitive advantage in marketing communications of McDonalds in India

McDonalds use those promotional tools that have a wide market coverage but less costly that allows them to capture completely Indian market easily by setting lower price.

2.1.3 Store layout, Store design and visual merchandise:

Store layout: there are three-store layout pattern for designing store layout. These are

Ø Grid pattern

Ø Free flow

Ø Boutique

Among the three McDonalds, use grid pattern. Under this pattern all item of the store are arranged separately based on their fixture. For example; their kitchen room, cash counter, dining space, ordering counter are separate.

Store design: In case of store design, they follow two ways .these are

§ External Design:

Ø Location: they select those locations where number of population is over 50000 and their retail shop is near about the street.

Ø Signs: they use a large board as the indicator of McDonalds

Ø Windows: they use glass around their whole retail store for giving the consumer a refreshing environment.

Ø Entrance: McDonalds have entrance in front of the store by which consumer can easily enter in the store.

§ Interior design:

Ø Floor covering: all of the retail store of McDonalds in India use tiles for the decoration of their floor.

Ø Ceiling: they beautifully decorate their store ceiling with light and ornamented frame.

Ø Mirrors: they use glass around the shop or at least their front side to allow the customer to see the inside scenario of the store.

Ø Checkout: In India in all the retail, store a checkout point to collect the money from the consumer.

Visual marketing in the India

McDonalds use visual marketing that allow the entire consumer to see what is happening inside the store. This allow a passerby to see what are the offerings of the store and they are psychologically motivated themselves to consume product from that store.

Competitive advantage in store layout, design, visual merchandising

By using Store layout, superior store design and visual merchandising, McDonalds attract and motivate a large number of customer to consume their product and for this; they get some more competitive advantage.

2.1.4 Customer service and facilitating services in the India

Ø McDonalds provide discount on their fast food items

Ø Provide high quality product to the consumer

Ø Price of products is low than the competitor

Ø Food is safe and healthy

Ø Ensuring Good value for money

Ø All products are safely packaged to protect it from accident and keep its standard high

Ø Trained salespeople who have good body language, good manner and behavior

Ø Cleanliness

Ø Separate washroom for men and women.

Ø Deliver the ordered product in time

Ø After sales service is provided

Ø Checks and cash as a payment method

Ø Maintaining long term Communication with customers

Competitive advantage in Customer service and facilitating services:

Low cost but quality good in a cleanness environment attract all the middle class, higher middle class, even higher class of Indian people to buy and consume McDonald's foods. As it is deliver, safe foods so babies are also get their choice able foods from McDonalds. For all these McDonalds get competitive advantage over the competitor.

2.1.5 Store formats and locations in the India

Store format

Many stores format is used by the retail marketer for the distribution of their products. These are given below;

· Family store

· Specialty store

· Departmental stores

· Supermarket

· Superstore

· Shopping mall

· Shopping Centre or plaza

· Hypermarket

Figure: store format

Among all McDonalds, follow specialty store for their retail marketing. Specialty store is the one where certain categories of products are delivered. As McDonalds deliver only first food items so, they can be called as specialty store.

Retail location

Location is the most important element in the retail marketing. McDonalds consider several factors determining the best location where they can established their retail outlet to attract the maximum number of customer and earning maximum profit. These factors include

Ø Income of the people

Ø Traffic,

Ø Number of population

Ø Geographic situation

Completive advantage by using formats and locations in the India

In India McDonalds, enjoy competitive advantage over local competitor and other international competitors because they established their retail shop in the crowded location, near the street, and in where the people's disposable income is high.

2.1.6 Pricing strategy and tactics:

There are two pricing strategy for the retail marketer. These are

Skimming pricing: under this pricing strategy marketer set higher prices for their product to earn higher profit.

Penetration pricing: under this strategy marketer set low prices for their product to reach maximum number of customer. McDonalds follow penetration-pricing strategy.

Completive advantage by using pricing strategy and tactics:

As McDonalds follow penetration, pricing so all level people can easily consume their product. That allows them to get maximum number of consumer that lead enjoys large scale of production and earning maximum profit.

3.1 Competitive advantage:

When any company enjoys advantage over the other competitors than it is called competitive advantage of this company. For example in India McDonalds enjoys competitive advantage over KFC and other local competitors.

3.1.1 Sustainable Competitive advantage of McDonalds in the India

Long-term advantage that a company has over its competitors is referred as sustainable competitive advantage of that company. Four criteria are satisfied by McDonalds that's why they has a sustainable competitive advantage over their competitors in India.

Ø Customer benefits: Consumers often search for quality products at a low price that is offered by the McDonalds that is important to them.

Ø Unique: as they have large market so they can go for a large production that ultimately allow them to keep the standard of the product by maintain a low price that is not possible by other competitors in India as well as whole world.

Ø Sustainable: McDonalds has a well-trained employee, production capacity, investment, customer loyalty, brand image that help McDonalds gain a sustainable advantage.

Ø Profitable: although product price is low in McDonalds but when any consumer purchase any food items and pays for the product then both the consumer and the company become profitable. Consumer profit is they get good value on the other hand company get a certain amount of profit for every transaction of every product.

3.1.2 The strength and the weakness of the retail mix of McDonalds in India

Retailer mix	Strength	Weakness
Merchandise range and assortment	Various types of fast food items are delivered by them. Such as pizza, burger, hamburger, sandwich, hot dog etc.	McDonald's main weakness is that they only deliver fast food items. For example, They do not have any electronics, grocery, cloth items.
Pricing strategy and tactics	McDonalds follow penetration pricing that is why they get a large number of customer. All level customer can purchase and consume from McDonalds. Low price price allow them to sell more.	for setting lower price for every product they earn less profit from every product.
Store layout, design and visual merchandising	McDonalds store layout pattern, superior store design and visual merchandising allow McDonalds to attract a large number of customer.	Some customers seek privacy when they are eating a food that is not possible in the Indian retail McDonalds.
Retail communications	McDonalds use advertising, newspaper, magazine, television for their communication with the target customer and delivering message.	McDonalds use limited media and spend less amount of money for their communication. If they spend more than they can attract more customer.
Customer service and facilitating services	Quality foods at a low cost, safely packaging, after sales service facility, timely delivering are the strengths of McDonalds.	sometimes they become unable to deliver the ordered food within time period for traffic jam or other reasons that demotivate consumer to deal with McDonalds
Formats and locations	McDonalds all retail store in India are in the roadside area where thousands of people are passing for their job. All the retail store of McDonalds is in the busy store.	Sometimes they do not get enough place for the target location because in India, it is necessary to open the restaurant covering a wide area but here they do not get target place always.

For having a sustainable advantage over the competitors Levy and weitz give some basis that are satisfied by McDonalds that lead them to be the market leader. These are

• Customer loyalty: McDonalds achieve customer loyalty that means they create a positive brand image in the consumer mind.

• Location: they choose those locations where people income level is up to standard, huge number of population etc.

• HRM: McDonalds have experience and well-trained employees.

• Distribution and information systems: McDonald's distribution and information system is very much active.

• Unique merchandise: they become unique brands in the fast food items.

• Customer service: McDonalds highly trained sales people always providing facilitating customer service and they are adapt in handling objection.

4.1 Challenges to continued international growth

When any company want enter any foreign market then they have to face some challenges that must be efficiently handled by the company to be successful in the foreign market. McDonalds also face some problem before and after entering in the foreign market. These challenges are given below

4.1.1 PEST factors:

Pest factors consist of four factors.

Ø Political factors: McDonalds face various political barrier when they are trying to enter a new market and India is not exceptional but they solve these entire problem by fulfilling all the political terms and conditions of the country.

Ø Economic factors: McDonalds consider economic condition of the Indian people. That is why they try to keep the food price as low as possible. To keep the low price they use the local spices and other material that allow them to maintain low price.

Ø Social factors: when McDonalds first introduced in India then they face a common question that how the product is produced? Is there any beef or pork as more than 85% people of India are Hindu. They overcome this situation by ensuring them there is no beef and pork item and they arrange many campaigns and quiz contest for making the people aware about the environment.

Ø Technological factors: In 1996 when McDonalds first launched in India then the people were not technologically strong. However, after 2005 they become more technologically sound. That is why McDonalds always try to update their website and online retail for taking the order, and providing information to the target consumer.

4.1.2 The competitive context

Before entering, McDonalds fully analyzed these four types of competitors as the competitive analysis two other related dimension. These are shortly given below:

Ø Market commonality: it refers the degree to which competitors compete in the Indian market.

Ø Resource similarity: it refers the ability to which competitors have the ability to use the same resources to serve the same market.

They also try to find out who are their direct and indirect competitors such KFC and other companies. They also analyzed the market about who are the potential competitors and incipient competitors.

4.1.3 Growth strategy:

McDonalds have opportunities to increase their outlet in more cities of India because in India more than 120 million people are living. So it is a big market for McDonalds. From four-growth strategy, i think they must go market development and product development strategy. I am giving my opinion for selecting these two strategies:

Market development: Under this growth strategy, existing product of McDonalds can be offered to the new market because all of their existing products are highly accepted by the Indian. If they go through this then their number of customer will increase as well as profit.

Product development: consumer taste and preference is always changing. To match with this changing customer preference McDonalds need to introduced new product or little modification of existing product will be accepted by the existing market because India have willingness to try the new product.

4.1.4 Growth objective

The growth objective of McDonalds in India as a retailer is to hold their present market position because now they are the market leader among the fast food retailers. McDonalds seek to increase their market share by increasing sales volume and profit.

4.1.5 Market entry method

There are various market entry method for entering in the foreign market. These are

Among all of these market entry method McDonalds use contractual agreement for entering the Indian market to reduce the political, cultural, social and other risk. They run their business through franchising with the Indian business people.

5 Conclusion

McDonalds are very much successful in their retail marketing in India that is why they are now the market leader in fast food retail business. In this assignment, I analyze all the elements of retail mix and show what advantage McDonalds have in what elements over the competitors. I also show what the reasons of their sustainable competitive advantage over the other competitors. The strength and weakness of each retail mix are given in this assignment. Finally, i discuss the PEST factors, their growth objective, and McDonald's entry method in India. The success of any retail market for any non-domestic retailer depend on the successful handling of the various barriers and consumer objection and delivering customer value according to the consumer taste and preference that is perfectly done by McDonalds in India.

McDonald's Retail Marketing in India