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Marketing Project
McDonald’s : Behind the Golden Arches
Anmol Bajaj and Akhil Satija
McDonald’s : Behind the Golden Arches
 ACKNOWLEDGEMENT

We take this opportunity to express our sincere gratitude to all concerned with the

successful completion of project. First of all I would like to thank Dr.Lallan Prasad for

providing us this opportunity to do the project and help us learn about the marketing mix of

Our chosen company- McDonald’s

 A Brief History of McDonald’s

History of McDonalds
1955
Ray Kroc opens his first restaurant in Des Plaines, Illinois and the McDonald’s Corporation is created.
1957
Quality, Service, Cleanliness and Value (QSC& V) becomes the company motto.
1959
The 100th McDonald’s opens in Chicago.
1961
Hamburger University opens in Elk Grove, near Chicago.
1963
One billion hamburgers sold.
Ronald McDonald makes his debut.
1964
Filet-O-Fish sandwich is introduced.
1965
McDonald’s Corporation goes public.
1967
The first restaurants outside of the USA open in Canada and Puerto Rico.
1968
The Big Mac is introduced.
The 1,000th restaurant opens in Des Plaines, Illinois.
1972
A new McDonald’s restaurant opens every day.
The Quarter Pounder is introduced.
1973
Egg McMuffin is introduced.
1974
The first Ronald McDonald House opens in Philadelphia.
The Happy Meal is launched.
1983
Chicken McNuggets is introduced.
New Hamburger University campus opens in Oak Brook, Illinois. Set in 80 wooded acres. Training is
provided for every level of McDonald’s management worldwide.
1984
50 billionth hamburger sold.
Ronald McDonald Children's Charities is founded in Ray Kroc’s memory to raise funds in support of
child welfare.
1994
Restaurants open in Bahrain, Bulgaria, Egypt, Kuwait, Latvia, Oman, New Caledonia, Trinidad and
United Arab Emirates, bringing the total to over 15,000 in 79 countries on 6 continents.
1996
McDonald’s opens in India – the 95th country.

McDonald’s - A Global Phenomenon

McDonald’s opened its doors in India in October 1996. Ever since then, our family
restaurants in Mumbai, Delhi, Pune, Ahmedabad, Vadodara, Ludhiana, Jaipur, Noida
Faridabad, Doraha, Manesar and Gurgaonhave proceeded to demonstrate, much to the
delight of all our customers, what the McDonald’s experienceis all about.
Our first restaurant opened on 15th April 1955 in Des Plaines, Illinois, U.S.A. Almost 50 years
down the line,we are the world's largest food service system with more than 30,000
restaurants in 100 countries, servingmore than 46 million customers every day.Click here for
more information on the history of McDonald’s.

Locally Owned

McDonald’s in India is a 50-50 joint venture partnership between McDonald’s Corporation

[USA] and two Indian businessmen. Amit Jatia’s company Hardcastle Restaurants Pvt. Ltd.
owns and operates McDonald’s restaurants in Western India. While Connaught Plaza
Restaurants Pvt. Ltd headed by Vikram Bakshi owns and operates the Northern operations.

Amit Jatia and Vikram Bakshi are like-minded visionaries who share McDonald’s complete
commitment to Quality, Service, Cleanliness and Value (QSC&V). Having signed their joint-
venture agreements with
McDonald’s in April 1995, they trained extensively, along with their Indian management
team, in McDonald’s restaurants in Indonesia and the U.S.A. before opening the first
McDonald’s restaurant in India.

Respect for local culture

McDonald’s India has developed a special menu with vegetarian selections to suit Indian
tastes and
preferences. McDonald’s does not offer any beef or pork items in India. Only the freshest
chicken, fish and vegetable products find their way into our Indian restaurants.

In addition, we've re-formulated some of our products using spices favoured by Indians.
Among these areMcVeggie™ burger, McAloo Tikki™ burger, Veg. Pizza McPuff™ and Chicken
McGrill™ burger. We've alsocreated eggless sandwich sauces for our vegetarian customers.
Even our soft serves and McShakes™ areegg-less, offering a larger variety to our vegetarian
consumers.

International Standards

McDonald’s India's local suppliers provide us with the highest quality, freshest ingredients.
Complete
adherence to the Indian Government regulations on food, health and hygiene is ensured,
while maintaining our own recognized international standards. Fast, friendly service - the
hallmark of McDonald’s restaurants the world over is the mantra we abide by.
Stringent cleaning standards ensure that all tables, chairs, highchairs and trays are sanitised
several times each hour. Such meticulous attention to cleanliness extends beyond the lobby
and kitchen to even the pavement and immediate areas outside the restaurant.

Our Philosophy
"We take the burger business more seriously than anyone else."

When McDonald’s founder, Ray Kroc made that memorable statement, he was letting the
world in on the philosophy and secret behind McDonald’s phenomenal success. Our vision
to be India’s "best" quick service restaurant experience is supported by a set of principles
and core values [McDonald’s Way]

The principles that guide us …

•
Quality, Service, Cleanliness & Value - It is an unflinching McDonald’s ideology that our
customers
must always get quality products, served quickly and with a smile, in a clean and pleasant
environment; and all at a fair price

We are committed to exceeding our customers' expectations in every restaurant every

time.

We have a passion and a responsibility for enhancing and protecting the McDonald’s
brand.

We believe in a collaborative management approach, employing a mutually respectful

business
philosophy,

We will seize every opportunity to innovate and lead the industry on behalf of our
customers.
 SEGMENTATION, TARGETING AND POSITIONING

Value propositions had to be directed to the right target market to establish a new product.

An interesting question was who would eat at McDonald’s? In order to develop the
Marketing strategy, it was important for any company to understand the consumer market.

The more one knew and understood about consumers, the more effectively one could
communicate and market to them. Four aspects of consumer behaviour which needed to
be examined to understand a consumer market were the ability of the people to buy,
consumer needs, buying motives and the buying process. The initial attempt of McDonald’s
was to induce trials and get the customers into the restaurants. Word of mouth and
advertising was expected to reveal the experience of eating at McDonald’s.

McDonalds Value Meal addressed the price sensitivity of the Indian consumer market.
However, irrespective of this effort, McDonalds was affordable to select customers only.
These were the ambitious middle, upper middle and affluent classes who were keen to
combine eating with fun

McDonald’s uses demographic segmentation strategy with age as the parameter. The main
target segments re children, youths and the young urban family.
 % Of Kids who inflence what FMCG brand their family
buys

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
BISCUITS Burgers & Pizzas Fruit Juices

As shown above, kids reign supreme in FMCG purchase related to food products. So to
attract children McDonald’s has Happy Meal with which toys ranging from hot wheels to
various Walt Disney characters are given. For this, they have a tie-up with Walt Disney. At
several outlets, it also provides special facilities like ‘play place’ where children can play
arcade games like air hockey etc. This strategy is aimed at making McDonald’s a fun place to
eat. This also helps the fast food giant to attract the young urban families wanting to spend
some quality time while their children have fun at the outlet.

To target teenagers, McDonald’s has priced several products aggressively, keeping in mind
the price sensitivity of this target consumer. In addition, facilities like Wi-Fi are also provided
to attract students to the outlets (like the one at Vile Parle in Mumbai).

“McDonald’s mein hai kuch baat” projects McDonald’s as a place for the whole
family to enjoy. When McDonald’s entered in India it was mainly perceived as
targeting the urban upper class people, today it positions itself as an affordable place
to eat without compromising on the quality of food, service and hygiene. The outlet
ambience and mild background music highlight the comfort that McDonald’s
promises in slogans like “you deserve a break today” & “feed your inner child”. The
commitment of quality of food and service in a clean, hygienic and relaxing
atmosphere has ensured that McDonald’s maintains a positive relationship with the
customers.
 CUSTOMER PERCEPTION AND CUSTOMER
EXPECTATIONS

Customer perception is a key factor affecting a product’s success. Many potentially

revolutionary products have failed simply because of their inability to build a healthy
perception about themselves in the customer’s minds. McDonald’s being an
internationally renowned brand brings with it certain expectations for the
consumers.

TARGET SEGMENT What McDonald’s mean to them?

A family with children Treat and a fun place for children.
Urban Consumer on the move Great taste, Quick service, ( a bite on the
go)
Teenager Hangout with friends yet affordable
THE MARKETING MIX
PRICING:

Pricing is the only mix which generates revenue for the organisation; all other are the
variable costs for the organisation. Designing a product, promoting it etc all costs something
and price must support these elements of the mix. Pricing should reflect the supply demand
relationship to be stable at least if not in equilibrium.

Food pricing was a sensitive issue in India. An ideal strategy was to focus on customer’s
ability to pay and tap the rich and upper middleclass population in India. Although
McDonald’s strategy was to increase sales volumes by making products available at
affordable price, its products were perceived to be expensive. The company outlets in Delhi
and Mumbai initially were opened due to the increased affordability of people with western
exposure and brand recognition factors in metros. Additionally, people in the metros were
open to experiment with variety of foods. Absorption of newer cultures was faster in the
Metros than other areas.
The mass markets in India were price sensitive. The positive factors were the growth in
consumer markets with rapid growth in disposable incomes, development of modern urban
lifestyles and the demand for value

Consumer’s perception of value is an important determinant of the price charged.

Consumers draw their own mental picture of what the product is worth. A product is more
than just a physical item; it also has psychological connotations for the consumer.

Pricing includes: List price, discount functions available, financing options available etc; it
should also consider the probable reaction from the competitor to the pricing strategy. The
danger of using low price strategy as a marketing tool is that the consumer may feel that the
quality of the product is compromised. Further this move may be matched by competitors
resulting in no extra demand.

McDonald’s has certain value pricing and bundling strategies, such as: happy meal, Combo
meal, family meal etc to increase sales volume. In fact McDonald’s has always played the
volume game and has historically kept its price minimal and without diluting the brand.

Mc Donalds vegetarian burgers are priced between Rs 20 and Rs 48. Wrap paneer salsa is
priced at Rs 45-50. The non vegetarian burgers are priced between Rs 30 and Rs 60. Wrap
chicken Mexican is priced at Rs 55. Medium French fries are priced at Rs 28, potato wedges
at Rs 20, soft serves at Rs 35, mc swirl at Rs 12, medium soft drinks at Rs 20 and medium
shakes at Rs 45.
PROMOTION

Advertising was known to have an impact on the minds and the hearts of the consumers.
But product and the value offered needed to be attractive and powerful to maintain
consistency in sales and build customer loyalty. Advertising was the backbone of
McDonald’s marketing strategy in India. The positioning had been directed towards
establishing McDonald’s as a family restaurant. Special efforts were made to not allow it to

get converted into a typical teenage hangout. Advertisements were created using storylines
with focus on emotions. Through a variety of advertisements, the visit to McDonald was
portrayed as a special occasion providing excitement and satisfaction to the customers who
comprised of families with kids and the youngsters.

Advertising helped in building brand recall, but advertising alone was not able to sustain the
brand. Despite the fact that McDonald’s was a fast food chain of restaurants, in India it was
positioned as the family restaurant and outlets were called “McDonalds Family Restaurant”.
Extra care was taken to make the restaurants child friendly, by providing play areas
wherever possible so that the parents could relax and have a good time while visiting
McDonald’s. The counters were low, tables were rounded so that children did not hurt
themselves in the restaurant and the menus are pictorially depicted so that a child could
order a meal without bothering parents. The entire restaurant was attractive and child
friendly.
When operations in India began, initially McDonald’s positioned itself as a place to visit with
the baseline "McDonald’s mein hain kuch baat" (“There’s definitely something about
McDonald’s”) in their advertisements. People were encouraged to try the McDonald’s
experience. However, over the years, after McDonald’s had been hugely accepted by Indian
customers, there was a need to evolve the communication strategy and move on from
trying to encourage and motivate people to visit for the first time to making

McDonald’s a regular experience. After McDonald’s established itself and people knew what
McDonald’s was all about, the baseline was changed to “Toh aaj McDonald’s ho jaye" (“Let
it be McDonald’s for today”), which talked about an everyday experience. The objective
was to continue positioning McDonald’s as a comfort zone for families

The brand’s media strategy focused more on the electronic media. The advertising
continued to use emotional appeal to display family ties and fun at McDonald’s. Indians
being emotional found it easier to correlate themselves with such types of emotional
messages. Advertisements with audio –visual appeal created more impact on the viewers.
So McDonald’s narrated the fun filled environment at their fast food outlet using electronic
media. McDonald’s did have enough repeat customers. The customer base increased

substantially since they started operations.

The strength of McDonald’s as a brand in India was that it was the most recognizable brand
world over amongst all age groups. It was the ‘Indianization’ of the brand that helped
McDonald’s establish in a new market successfully. The brand’s success was attributed to its
promise of a great fun filled experience delivered at its outlets.

McDonald’s executed promotional campaigns involving children. McDonald’s used kids as

an entry strategy to the family. World over McDonalds was a family restaurant and children
were an integral part of a family. During the last few decades, kids had become the target
audience for most categories including consumer durables. In the 1990's, India saw a major
shift to nuclear families. When joint-extended families existed, the head of the family made
most decisions. In smaller-nuclear families, individual opinions had become more dominant,
whether it was buying a refrigerator or a TV or whether it was about eating out.

Children were an integral part of the decision making process for buying things and played
an influential role. Word of mouth and peer pressure worked effectively for this age group.
Children influenced the decisions of parents, and McDonald’s realized that this group could
no longer be ignored.

McDonald’s “Happy Meals” were often accompanied with Lego toys to attract children and
the restaurant maintained several ‘Play-Zones’ to provide children with a fun experience.
The restaurants hosted birthday parties, played latest pop-music hits and became a
favourite place even for the new generation of jean-clad ‘Americanized’ teenagers of India.
McDonalds even introduced unusual ice-cream flavours such as bubblegum, green apple
and berry to entice the curious youngsters.

Using collectable toys, television commercials, promotional schemes in schools and figures
such as Ronald McDonald, McDonald’s pursued its main target group – children. Many
parents objected strongly to the influence this had over their own children. McDonald’s
adhered to all the advertising codes in each country. But some argued that it still amounted
to exploitation of children, sponsoring so many school events and learning programs out of
publicity, not philanthropy. In view of this criticism, McDonald with some other companies
vowed to devote at least half of their radio, print, television and internet advertising to
promoting more healthful products and healthy lifestyle. Mary Dillon, McDonald’s Chief
Marketing Officer said that McDonalds planned to put more emphasis on physical activity in
ads and was reviewing how it could use licensed characters. Disney characters were used

extensively by McDonald’s at one time but the entertainment company decided to allow its
characters to push products that met certain nutritional guidelines’

A clear understanding of the consumer value helps decide whether the cost of promotion is
worth spending.

The three main objectives of advertising for McDonald’s are:

Make people aware of an item

Make them feel positive about it

Make them remember it

The right message has to be communicated to the right audience through the right media>
McDonald’s does its promotion through televisions hoardings and bus shelters. Messages
gain consumers’ attention and keep their interest. The next stage is to get them want what
is offered.

Even the paper mats on the trays at McDonald’s are designed as per ongoing marketing
strategy of the food chain giant. For e.g.: during the French fries issues, all their paper mats
had description of the burgers, how the vegetarian products are made etc to regain the
confidence of the consumers.
THE 80-20 MENU BOARDS

Even the menu counters in the outlet are a marketing tool for the company. They have been
designed in such a way that they catch attention of the potential consumer and tempt him
to order McDonald’s product. So the menu boards are both descriptive and visual. They call
it 80-20 menu board i.e. eighty percent visual and 20 percent description.

A recent survey by the company showed that the consumers have a clear remembrance of
the 80-20 board and it gives them the feel of the product before it is purchased.

At Mc Donald’s the prime focus is on targeting children. In happy meals too which are
targeted at children small toys are given along with the meal. Apart from this, various
schemes for winning prices by way of lucky draws and also scratch cards are given when an
order is placed on the various mean combos. In fact, the various econo meals and value
meals also signal to the customer that buying separate items results in greater value for
money for the customer.

McDelivery Online – In India, McDonald’s first launched home delivery of meals in

Mumbai in 2004. McDonald’s now has plans to launch web-based delivery service in India
(across 75 McDelivery cities) in 2010, a pilot for which has already been tested by it in
Hyderabad. The company hopes to add 5 per cent to sales via Web delivery. McDonald’s
web-based delivery model will be based on serving the customer quickly wherein the drive
time does not exceed seven minutes because its food has to be eaten within ten minutes of
preparation. The footfalls in India are amongst the highest in the world, but the average bill
is amongst the lowest. At present (March 2010), Domino’s Pizza (operated by Bhartia
Group-promoted Jubilant Food works under a master franchise agreement) has a 65%
market share in the home delivery segment.
Ethics and Social Responsibility
In India, Mrs. Maneka Gandhi, a popular environmental activist and her supporters launched
an aggressive campaign against fast food chains which contributed in the destruction of the
ecological balance and promoted unhealthy food. To respond to such campaigns,
McDonald’s launched several pro-green advertisements such as “We love Green” and
funded community related activities including “Keep our city clean”. McDonalds sponsored
“Olympic Day Run” in 2005 and offered baked potatoes and McCurry Pan instead of fries.

As a part of its Corporate-Citizenship strategy and to help its own brand and reputation in
India, McDonald’s participated in community-related projects targeting children.

McDonald’s in India hosted interschool arts competition and raised funds for charity on
World Children’s Day. The restaurant celebrated Children’s week every year from November
14-20 and tactfully supported educational programs for girl-child to promote goodwill
among community organizations who worked towards improving status of women in India.
McDonald’s also partnered with local health organizations to make India Polio-free by
helping to set up Pulse-Polio program to provide free vaccine to children.

In November 2006, McDonald’s India announced the completion of its annual fundraiser,
McDonald’s World Children's Week 2006 `Each One Contribute One'. The month-long

campaign garnered proceeds for vision correction of the visually and economically
challenged children. As part of `Each One Contribute One' programme, Re 1 was contributed
on the sales of all meals sold from October 13 - November 20, towards the corrective eye
surgeries of the needy children

According to Mr Vikram Bakshi, Joint Venture Partner and Managing Director, McDonald’s
India (North and East Region), McDonalds had come a long way since 2002 and the results
were encouraging. Over 390 children were treated at the pediatric centre at Dr Shroff's
Charity Eye Hospital with the support of NGO ORBIS
McDonald’s did not offer any beef or pork items in India, and even created egg less
products for their vegetarian customers. French Fries in India were not beef flavoured as in
the US. During popular religious festivals in India, McDonald’s introduced more vegetarian
selections.

PRODUCT

Product is the physical product or service offered to the consumer. Product includes certain
aspects such as packaging, guarantee, looks etc. This includes both the tangible and the
non-tangible aspects of the product and service.McDonalds has intentionally kept its
product depth and product width limited.

McDonalds studied the behaviour of the Indian customer and provided a totally different
menu as compared to its International offering. It dropped ham, beef and mutton burgers
from the menu. India is the only country where McDonalds serve vegetarian menu. Even the
sauces and cheese used in India are 100% vegetarian. McDonalds continuously innovates its
products according to the changing preferences and tastes of its customers

Before we look at what McDonald’s has to offer in India, we’ll look at the global menu of
McDonald’s and how it adapts itself to different global markets

In order to satisfy the palate of the local popilation of a country, McDonald’s offers
regionalized items in its menu. The result is a McDonald’s menu which is not availibale in
other countries and is exclusive to a particular country.

Asia

Bahrain
In addition to McArabia, McDonald’s restaurants in Bahrain, beginning in March 2008, sell
the McCrispy, a meal consisting of 1, 2, or 3 chicken strips served in a wrapper for a single
strip or in a box for 2 or 3, with a choice of barbecue, sweet & sour, or garlic sauce. As in
all Middle Eastern McDonald’s restaurants, all food served in Bahraini outlets is halal.

China
In China, the Chicken McNuggets come with the traditional BBQ, Sweet & Sour, and Honey
Mustard sauces, but there's also a chili garlic sauce (very popular in China). They also
include crispy chicken wings (called McWings) on their menu, which comes in 2, 4, and 6
pieces. There is also a seasonal Chinese New Year meal available, including Grilled Chicken
Burger, curly fries, with a horoscope of the twelve zodiac animals of Chinese astrology and
traditional "red" packets, or gift bags, for monetary gift giving as good luck.

What is also interesting to note is that in china  McDonald’s offers a delivery service in most
major cities - the delivery number within China is 4008 517 517, as the Chinese
pronunciation of 517 is wu yao qi, which sounds similar to wo yao chi, meaning "I want to
eat". Deliveries are taken 24 hours a day via a call centre to anywhere that is within 5 km of
a restaurant (3 km in several cities). Deliveries are usually made by electrically powered
scooters, although in several cities where motorcycle bans are in place, a conventional
courier bicycle is used. Food is normally carried in a large insulated backpack.

Hong Kong
McDonald’s sells beef and chicken burgers. Fried chicken wings and nuggets are also
popular. In some restaurants, a separate counter sells ice cream and desserts to
pedestrians. Soft Serve Ice Cream can be ordered with either red beans or green beans.
Some restaurants have a section for the McCafé. Hong Kong hosts some of the world's
busiest McDonald’s with many operating round the clock. It also sells many toys or dolls, like
Hello Kitty, Snoopy, and Disney figures in addition to set meals, which are very popular. In
Chinese New Year, red packets (lai see) are included in set meals. During the local Bun
Festival, McDonald’s restaurant on the island of Cheung Chau sells mushroom burgers
instead of hamburgers and any other items that contain meat. In Kowloon Park, there is also
a small counter named Snack Station selling ice cream, as well as a counter that sells
McDonald’s drinks in the swimming pool.
Indonesia
All McDonald’s in Indonesia are certified Halal.
Some of the local menu items that McDonald’s offers in Indonesia, which you’ll not find
anywhere else are:

 Crispy chicken and hot chicken: fried chicken, which is by far more popular than the
hamburgers
 McRice: small mound of steamed, plain rice (larger rice item is called Supersize Rice)
 McSoup: chicken flavored soup with bits of reconstituted croutons and vegetables.
 McSatay: bun containing a beef patty covered with satay sauce (spicy ground peanut
sauce)
 McSpaghetti
 Bubur ayam or chicken congee

McDonald’s sell most of the items in packet, such as Paket Hemat or Pahe (Saver Packet)
and Paket Nasi or Panas (Rice Packet). Chilli sauce, an essential part of Indonesian meal, and
ketchup are available.

Pakistan
McDonald’s Pakistan offers the standard range of items plus several other regional offerings
similar to those available in Middle Eastern and South Asian outlets. The McArabia and the
Spicy Chicken Burger are very popular. A chicken version of the Big Mac is also sold. As in
many Middle Eastern restaurants, all food is served Halal.

Thus we see that McDonald’s has over the years started regionailizing the menu as per the
local needs and demands. The more globalized the world became, the more localized
Mcdonld’s got.

Here is a look at Indian Menu that McDonald’s offers

India

The Vegetable McCurry Pan, the famous dish is very popular and is an original creation of
McDonald’s across India. It starts with a rectangular shaped crust that is topped with a
creamy sauce, mushrooms, and vegetables including broccoli, baby corn, and red bell
pepper. It is then baked until the crust is crisp and the toppings are hot and bubbly.
The Chicken McCurry Pan is the same as its vegetarian version. It starts off with a rectangle
of dough and is topped with a tomato-curry sauce, spiced with thyme, basil, and oregano. It
is finished off with chicken, bell peppers, and cheese and is baked till crisp and bubbly.
There is an Indian version of the Big Mac, called the Maharaja Mac, which is made with 2
grilled chicken patties and is topped with onions, tomatoes, cheese and a spicy mayonnaise.
It was originally made with lamb, but is now made with chicken.
Mexican-style wraps for both vegetarians and non-vegetarians, like the Mexican Chicken
Wrap, and Curry Pans in Shahi-Paneer and Chicken-Tikka variations are also offered.
The Paneer Salsa Wrap is sold there in India. It starts with a small slab of paneer that has
been dredged in a coating that is a cross between Mexican and Cajun in flavor. It is fried and
the paneer patty is wrapped in flatbread and topped with a salad mixture that includes
lettuce, red cabbage and celery and then is finished off with vegetarian mayonnaise, salsa
and cheddar cheese.
Other items on the Indian Menu include chicken and fish products like the McChicken and
the Filet-O-Fish.
The vegetarian burger menu consists of the McAloo Tikki Burger. It is a vegetable burger,
which includes a patty made out of potatoes, peas, and spices. It also includes tomato slices,
onions, and vegetarian mayonnaise. [6]
McVeggie is another Vegetarian burger on the menu. It looks similar to the above McAloo
Tikki Burger, but starts with the sesame seed bun. In between the bread, you'll find a
vegetarian patty that is made from peas, carrots, green beans, red bell pepper, potatoes,
onions, rice, and seasoning. This vegetarian burger is garnished with lettuce, and has
mayonnaise (referred to as Veg Sauce in India) spread thickly on the bread. Another menu
item sold there is the Chicken McGrill. It starts off with a thin grilled chicken patty that is
embellished with cilantro mayonnaise, onions and tomatoes and is served on a toasted bun.

Before entering the Indian market, McDonald’s studied the local culture and value system
that the indians live by. In addition to this, the conusmption decision making was also
factored in. It found out that though a substantial portion of the population was non-
vegetarian, they preferred mostly chicken, mutton and fish. Pork and Ham meats were
against the religious beliefs of the Hindus and Musliims, who made up most of the Indian
culture fabric.

As a result, McDonald’s for the first time in their history, decided to do away with the pork
and beef items from their menu. IN 2006, McDonald’s even dropped mutton items from
their menu.

McDonald’s also re-engineered their operations to ensure that the cheese and cold sauaces
used are absolutely 100% vegetarian. Also, In India, meat and vegetarian meals are
prepared in separate areas of the restaurant because of religious laws about preparation of
food for vegetarians and meat-eaters. Cooks preparing vegetarian dishes wear distinctive
green aprons.
Place
McDonaldizing the Suppliers
The place mainly consists of the distribution channels. It is important so that the product is
available to the customer at the right time, at the right place and in the right quantity. There
is a certain degree of fun and happiness that a customer feels each time he dines at
McDonalds. There are certain value propositions that McDonalds offer to its customers
based on their needs. McDonalds offers hygienic environment, good ambience and great
service. Now McDonalds have also started giving internet facility at their centres and they
have been playing music through radio instead of the normal music. There are certain
dedicated areas for children where they can play while their parents can have some quality
time together.

Here is a look at the McDonald’s Supply chain in India.

Overview

Did you know that every year, Rs. 50,000 crore worth of food produce is wasted in India?
This is mainly because of the lack of proper infrastructure for storage and transportation
under controlled conditions. McDonald’s is committed to providing quality products while
supporting other Indian businesses. And so, we spent a few years setting up a unique Supply
Chain, even before we opened our first restaurant in India.

A Supply Chain is a network of facilities including - material flow from suppliers and their
"upstream" suppliers at all levels, transformation of materials into semi-finished and
finished products, and distribution of products to customers and their "downstream"
customers at all levels. So, raw material flows as follows: supplier - manufacturer –
distributor – retailer – consumer. Information and money flows in the reverse direction. The
balance between these 3 flows is what a Supply Chain is all about.

When there is a balance in the finished product ordering, the Supply Chain operates at its
best. Any major fluctuation in the product ordering pattern causes excess / fluctuating
inventories, shortages / stock outs, longer lead times, higher transportation and
manufacturing costs, and mistrust between supply chain partners. This is called the Bullwhip
Effect.

Depending on the situation, the Supply Chain may include major product elements, various
suppliers, geographically dispersed activities, and both upstream and downstream activities.
It is critical to go beyond one’s immediate suppliers and customers to encompass the entire
chain, since hidden value often emerges once the entire chain is visualized. For example, a
diesel engine manufacturer may be able to integrate a GPS locator system into its engine
control system. Its immediate customer, a heavy truck manufacturer, may see no need for
this functionality. However, the downstream customer, a trucking company with a large
fleet, may be very interested in a locator system. Understanding the value to the
downstream customer is part of the supply chain management process.

Cold Chain

The Cold Chain is necessary to maintain the integrity of food products and retain their
freshness and nutritional value. The Cold Chain is an integral part of the Supply Chain

Setting up the Cold Chain has involved the transfer of state-of-the-art food processing
technology by McDonald’s and its international suppliers to pioneering Indian
entrepreneurs, who have now become an integral part of the Cold Chain.

The term Cold Chain describes the network for the procurement, warehousing,
transportation and retailing of food products under controlled temperatures. McDonald’s
restaurants store products to be used on a daily basis, within a temperature range of –18ºC
to 4ºC. About 52% of our food products need to be stored under these conditions before
they are used.
Local Sourcing

McDonald’s has always been committed to sourcing its requirements from local suppliers
and farmers. This assurance is rooted in the philosophy of our company's founder, Ray Kroc.
He firmly believed in mutual benefits arising from a partnership between McDonald’s and
the local businesses, thus ensuring that McDonald’s commitment to growth was mirrored by
that of its partners.

In keeping with this belief, we have carefully identified local Indian businesses that take
pride in satisfying customers by presenting them with the highest quality products.
Adherence to Indian Government regulations on food, health and hygiene were a top
priority.

McDonald’s India today purchases more than 96% of its products and supplies from Indian
suppliers. Even our restaurants are constructed using local architects, contractors, labour
and maximum local content in materials.

The relationship between McDonald’s and its Indian suppliers is mutually beneficial. As
McDonald’s expands in India, the supplier gets the opportunity to expand his business, have
access to the latest in food technology, get exposure to advanced agricultural practices and
the ability to grow or to export. There are many cases of local suppliers operating out of
small towns who have benefited from their association with McDonald’s India.

Vital Links in our Cold Chain.

All suppliers adhere to Indian government regulations on food, health and hygiene while
continuously maintaining McDonald’s recognised standards. As the ingredients move from
farms to processing plants to the restaurant, McDonald’s Quality Inspection Programme
(QIP) carries out quality checks at over 20 different points in the Cold Chain system. Setting
up of the Cold Chain has also enabled us to cut down on operational wastage

Hazard Analysis Critical Control Point (HACCP) is a systematic approach to food safety that
emphasizes prevention of illness or presence of microbiological data within our suppliers'
facilities and our restaurants rather than its detection through inspection. Based on HACCP
guidelines, control points and critical control points for all McDonald’s major food
processing plants and restaurants in India have been identified. The HACCP verification is
done at least twice in a year and certified.
Suppliers

Trikaya Agriculture - Supplier of Iceberg Lettuce.

successfully grows speciality crops like iceberg lettuce, special herbs and many oriental
vegetables. Farm infrastructure features:

• A specialized nursery with a team of agricultural experts.

• Drip and sprinkler irrigation in raised farm beds with fertilizer mixing plant.

• Pre-cooling room and a large cold room for post harvest handling.

• A large cold room and a refrigerated van for transportation where the temperature and
the relative humidity of this crop is maintained between 1º C and 4º C and 95% respectively.

Vista Processed Foods Pvt. Ltd. - Supplier of Chicken and Vegetable range of products.

A joint venture with OSI Industries Inc., USA, and McDonald’s India Pvt. Ltd. Vista Processed
Foods Pvt. Ltd. produces a range of frozen chicken and vegetable foods. A world class
infrastructure at its plant at Taloja, Maharashtra, has:

• Separate processing lines for chicken and vegetable foods. 

• Capability to produce frozen foods at temperature as low as -35 Degree Celsius to retain
total freshness.

• International standards, procedures and support services. 

Dynamix Diary - Supplier of Cheese.

Dynamix has brought immense benefits to farmers in Baramati, Maharashtra by setting up a

network of milk collection centres equipped with bulk coolers. Easy accessibility has enabled
farmers augment their income by finding a new market for surplus milk. The factory has:

• Fully automatic international standard processing facility. 

• Capability to convert milk into cheese, butter/ghee, skimmed milk powder, lactose, casein
& whey protein and humanised baby food. 

• Stringent quality control measures and continuous Research & Development.

Amrit Food - Supplier of long life UHT Milk and Milk Products for Frozen Desserts.

Amrit Food, an ISO 9000 company, manufactures widely popular brands - Gagan Milk and
Nandan Ghee at its factory at Ghaziabad, Uttar Pradesh. Its plant has:

• State-of-the-art fully automatic machinery requiring no human contact with product, for
total hygiene. 

• Installed capacity of 6000 litres / hour for producing homogenised UHT (Ultra High
Temperature) processed milk and milk products. 

• Strict quality control supported by a fully equipped quality control laboratory. 

Radhakrishna Foodland - Distribution Centre.

An integral part of the Radhakrishna Group, Foodland specialises in handling large volumes,
providing the entire range of services including procurement, quality inspection, storage,
inventory management, deliveries, data collection, recording and reporting. Salient
strengths are:

• A one-stop shop for all distribution management services. 

• Dry and cold storage facility to store and transport perishable products at temperatures
up to - 22 Degrees Celsius. 

• Effective process control for minimum distribution cost.

The Road Ahead

Tier 1 and tier 2 cities : The main target customer for McDonald’s is the
new urban Indian family. With the customer demographics constantly
changing and tectonic social and cultural shifts being observed in Tier 2 and
Tier 3 cities due to globalization, the company is now expanding to Tier 2 cities
like Pune and Jaipur.

Rolling out McBreakfast across all outlets : In India, the company has
recently launched its entry into the breakfast food category. This is now
launched on a pilot basis on select stores. In Mumbai, it available at the Vile
Parle outlet. The company views this category as a key growth driver in future.
REFERENCES

Marketing Management – Dr. Rajan Saxena

Marketing Management 11th edition- Philip E. Kotler

McDonald’s : Behind the Arches by John S love

www.Mcdonaldsindia.com