McDonald's Brand Strategy & Challenges in India: A Case Study

About McDonald's India

Can you guess the year McDonald's came to India? Do you remember the first bite of a McDonald's burger? Though it may be blurry, it's not all lost. By now, your affinity towards the brand must have grown 10 folds (if you haven't turned into a health freak). On October 13, 1996, McDonald's opened its first restaurant in Vasant Vihar, Delhi. McDonald's entered the Indian market via 50:50 joint ventures. One is North & East owned by Vikram Bakshi and other West & South owned by Amit Jatia.

First Mc Donald's store in India - Vasant Vihar, Delhi

McDonald's food menu revamp for Indian consumers

The snack and quick-eat markets in India were already dominated by Haldirams, Nirula's, Bikanervala, etc. As a vegetarian market, the Indian food market was challenging for an MNC like McDonald's to enter. This resulted in a complete revamp of the food menu. McDonald's even ensured that its mayonnaise and sauces were egg-free. Similarly, the restaurant's kitchen was divided into two sections-one for preparing vegetarian burgers and one for preparing non-vegetarian burgers. The Mc Aloo Tikki, which consisted of mashed potatoes, peas, and Indian spices, was priced at just rupees 20. Having a street food touch and reasonable pricing made McDonald's instantly appealing to a majority of Indian consumers. With the introduction of an innovative idea like Happy Meals and an effective brand strategy, McDonald's was able to position itself as a snack QSR in India and eventually became one of the most successful family restaurants in India.

SWOT Analysis of the brand

Definition: SWOT Analysis is a strategy tool built to give insights about a brand's Strengths, Weaknesses, Opportunities, and Threats. This analysis gives a clear picture of the current position of the brand and can aid in helping solve the problems the brand poses.

Strengths

1. First Mover Advantage

If you have watched the film: The Founder, you must have realized that the biggest strength of McDonald's is the first-mover advantage of QSRs. McDonald's innovated a quick-movement kitchen structure that was designed to minimize unnecessary movement and reduced the time taken to serve an order. This helped McDonald's maximize sales and position itself as an effective and smart brand.

2. Real Estate Empire

McDonald's has a multi-billion real estate empire in the world. McDonald's owns 40,031 restaurants spread across 119 countries. India has 330 McDonald's restaurants and Mcdonald's is all set to open 300 stores in the next 5 years, which will almost double the retail footprint. Apart from giving its brand name, and recipes to the franchises it owns, McDonald's owns the land and earns through rents paid by franchise owners. How do you feel about this? Let me know in the comment section.

3. Tasty food

Mcdonald's fries are considered the tastiest fries in the world according to a consumer survey. Mcdonald's tweaks its products according to the taste and eating habits of the country it operates in. Masala Aloo patty burger, Spicy chicken burger – the spice element introduced by McDonald's in India is a smart move that makes McDonald's a tasty brand suitable for Indian consumers.

4. Tech-savvy

McDonald's has taken initiative to adapt to modern technological advancements. For example, the installation of kiosks for ordering instead of going to the counter and making an order. In fact, if you visit a newly opened McDonald's, you are likely to notice the shift from a red, yellow, and friendly tone to a black, grey, modern tone. Another interesting tech advancement that Mcdonald's has made is a Table Bag – a bag that literally transforms into a table.

Weaknesses

1. The Franchise model

Even though McDonald's franchise model looks successful, lack of control over the franchise subjects McDonald's brand image to a certain degree of risk. Staff mismanagement, customer dissatisfaction, and low revenue can lead to conflicts that take time and money to resolve.

2. Negative publicity

Indian consumers have complained about McDonald's long-term storage of food which negatively impacted the brand's image and hence, decreased the brand equity. Despite McDonald's efforts to curb the problem, this perception still exists.

3. High-Cost Operation and Production

In India, the price of machinery and operations is expensive. A decade ago, most of the machinery was imported from abroad. However, today only French fryer is imported whereas others are being produced in India. Low pricing of products and high operating and production cost makes McDonald's franchise expensive.

Opportunities

1. Tier 2 Tier 3 cities Expansion

According to the director of McDonald’s Mr. R P Arvind, post-COVID-19, McDonald's team has seen a huge increase in the influx of consumers from Tier 2 and Tier 3 cities in India. Drive-Thrus were the main source of revenue. Hence, it is clear that there is now a huge demand for McDonald’s products in Tier 2 and 3 cities. Capitalizing on this data and setting up restaurants in high-demand locations can prove to be a good opportunity for McDonald's business.

2. Low-Calorie Menu

As people are becoming woke, McDonald's should capitalize on this opportunity as well. Introducing health-friendly burgers with almost the same taste and feel can work well for McDonald's brand loyalty.

3. Breakfast Menu

Although Mcdonald's breakfast menu is quite a hit, I am sure it's mainly the teenagers who contribute to the breakfast revenue. Mcdonald's breakfast menu (pancakes, sausage McMuffin, Cheese McMuffin, etc) does not align with the taste of the majority of Indians. We prefer simple breakfast options like - poha, idli, paratha, chai, and coffee. McDonald's has an opportunity to capitalize on Indian-centric breakfast options without losing its brand identity. For example – Ginger tea, Mc Rice cakes (Idli), Mc Poha and Chai meal, Mc Crêpes (Dosa), etc.

Threats

1. Intense competition

McDonald's faces intense competition from emerging fast food brands like Burger King, which entered the Indian market in 2014, Wat-A-Burger - an Indian burger brand, Wendy's, etc. The fierce competition in this market keeps McDonald's on its toes and has taken away a decent share of its revenue.

Source: statista

2. Changing Food trends

As consumers are becoming more woke, people are down to cutting sugar, excessive salt and preservatives. This is a threat to McDonald's as it would take time to pivot to healthy food options, plus it would result in diluting the brand image, which can be detrimental to the brand.

3. Difficulty in operations

McDonald's entered the Indian market via 50:50 joint ventures. One is North & East owned by Vikram Bakshi and the other West & South owned by Amit Jatia. However, in 2013 Vikram Bakshi quit the franchise business over disagreements with Mcdonald's and now the sole owner of McDonald's India is Amit Jatia. This setup makes operations tricky and time-consuming. Since India is a huge country with diversity, keeping tabs on consumers' preferences and monitoring overall operations can be challenging.

Marketing Strategy and Campaigns – How McDonald's developed its Brand Equity through TV commercials

1. Mc Donald's children centric Ad in 1996-97 – #Mc Donald's Mein Hai Kuch Baat

The first TV Commerical of McDonald's aired in India in 1997. The primary target audience for the advertisement was mainly kids, which made families—the secondary target audience. The commercial tries to connect with parents through parental emotions and sells McDonald's differentiator—A Happy Meal to their kids. An immaculate shot of the kid's expression changing from sad to excited when he sees a toy was a great technique to connect with parents and excite children about a playful experience at the restaurant.

2. McDonald's adults-centric Ad in 1998-99 – Toh aaj, mmmm.. Mc Donald's hojaaye?

Earlier, we discussed how McDonald's had capitalized on parental emotions and positioned itself as a children's QSR. It had already targeted the parents as its audience, but quite indirectly. McDonald's next move was to expand its Target audience to adults. In this advertisement, we can clearly see how the kid is excited to hear the news and wants to visit McDonald's to celebrate, and the father is secretly craving a McDonald's burger. In the last shot, the father runs into his boss at McDonald's, which smartly conveys to the audience that McDonald's is now a choice for both, kids and adults.

3. McDonald's adults-centric Ad 2003-present – I'm lovin' it!

With the SKUs that McDonald's had, that is, burgers, ice creams, MC puffs, etc. People naturally started to have apprehensions about the quality and health index of McDonald's. McDonald's had already positioned itself as a child-friendly QSR brand, then a family QSR brand, and now wanted to position itself as a healthy snacking brand in India to maximize sales. They released this commercial on TV which shows a couple visiting McDonald's when he is sick. This commercial added to the goodwill of McDonald's and contributed to changing the perception of the brand.

4. McDonald's recent campaign promotes inclusivity - #EatQual

EatQual is one of my favorite campaigns that I have witnessed recently. Now that Mcdonald's has captured almost everyone as its audience, it has made sure not to leave anyone behind. It has introduced a special pack for customers with limited mobility and has taken an initiative to make them feel equal.

In Conclusion

Kidding!

McDonald's has smartly penetrated the Indian fast-food market and has successfully positioned itself as the most popular burger brand among kids and adults through effective advertisements and marketing techniques. Apart from that, revamping the food menu and capturing a decent position in the market has now made McDonald's the leader of the fast food business in India.

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