Mc Donald’sValue Creation

Created By:Pulkit Gupta(13DM142)

HistoryHeadquartered in the United States, the company began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald.

In 1948 they reorganized their business as a hamburger stand using production line principles.

Businessman Ray Kroc joined the company as a franchise agent in 1955. He subsequently purchased the chain from the McDonald brothers and oversaw its worldwide growth.

Some FactsMcDonald's is the world's leading food service retailer with more than 34,000 restaurants in 119 countries serving more than 68 million customers each day and employing more than 1.7 million people.

In 1996, McDonald’s entered India through a joint venture with two local Indian companies— Hardcastle Restaurants Private Limited in the west and south region and Connaught Plaza Restaurants Private Limited in the north.

Franchise Model – Only 15% of the total number of restaurants are owned by the Company.

Mission StatementMcDonald's brand mission is “to be our customers' favorite place and way to eat and drink with inspired people who delight each customer with unmatched quality, service, cleanliness and value every time.”

As per McDonald’s Senior Management:

“Our worldwide operations have been aligned around a global strategy called the ‘Plan to Win’ centering on the 5 Ps for exceptional customer experience: People, Products, Place, Price and Promotion.”

“We are a learning organization that aims to anticipate and respond to changing customer, employee and system needs through constant evolution and innovation.”

The great Indian challenge As stated by Amit Jatia, vice chairman of McDonald’s India, West & South:

“When the company entered India, it was quick to note that its biggest challenge would be to cater to the local tastes and preferences. In addition, most customers initially perceived McDonald’s to be an expensive restaurant that catered only to the youth. The challenge was to break that perception and gain acceptance as a family restaurant.”

As stated by Vikram Bakshi , Managing Director ** , North & East:

“It really doesn’t make sense to sell beef in a country where 85% of the population doesn’t eat or will even shun a restaurant where beef is served”.

**Role disputed till any notice from London Court of International Arbitration

Excellence in 5 PsToday we can see that McDonald’s has changed all these consumer perceptions by its unique value design, communication, delivery mechanism and despite increasing competition they are able to sustain these values.

Company has established a firm brand image by creating value for customer in five marketing dimensions:

1. Product2. Price3. Place4. Promotion5. Packaging

ProductMcDonald’s changed its product line altogether by adapting to Indian conditions. It included some Indian favorites like Aloo and Paneer items cooked with Indian spices.

Product Elimination: Removal of Beef flavored products restricted to chicken, fish and lamb.

Mc Aloo Tikki is the best selling product till now. It became possible by producing and selling the burger in Indian style.

Same product variety and taste across India.

ProductRecently the fast food giant has launched some new offerings:

Breakfast Meal

Shake Shake Fries

PriceMcDonalds Aloo Tikki created a sensation in price obsessed Indian fast food market.

They launched it with a introductory price of Rs. 20 only. That was even cheaper than some local snacks items like Vada Pav.

Today they are offering a number of economic meal options such as

Happy meal ,Value meal, Combo meal etc.

Price Comparisons

McDonalds KFC SUBWAY

McAloo Tikki Meal-Rs 79 Veg Zinger Meal-Rs 99 Veggie Delite-Rs 80

McVeggie Meal-Rs 119 Twister Meal-Rs 135 Veggie Patty-Rs 120

McChicken Mel-Rs 139 Chicken Zinger Meal-Rs 135 Chicken Tikka-Rs 135

Some Meal Options

PlaceMcDonald's opened its first Indian outlet in Vasant Vihar, New Delhi in October 1996.

Today they are present in almost all Tier-1 and Tier-2 cities, along the major highways.

Different kinds of outlets in India:1. Big family size restaurants2. Stores in high density markets3. In shopping malls4. At railway stations and bus stations

Different channels for distribution:1. Franchise outlets2. Company owned flagship outlets3. Drive-thru and Home delivery.

PromotionThrough innovative advertising and sales promotions they converted this youth and kids oriented restaurant to a Family restaurant in India

Individual communication - Word of mouth, peer group.

Free distribution of children toys with every happy meal.

Event Catering : like new year, Christmas, Birthday celebration, company meetings etc.

PromotionMass communication – Television advertisements and child amusement activities at outlets, drives and campaigns.

Some of the most famous marketing campaigns of McDonald’s:

“You Deserve a break today, so get up and get away- To McDonald’s”

“Aap ke zamane mein ,baap ke zamane ke daam”.

“Food, Folks, and Fun”

“I’m loving it”.

PackagingMcDonald’s uses an internal global scorecard tool called the Eco-Filter to help make packaging decisions while keeping the environment in mind. 

Use of green and red dots to indicate vegetarian and non vegetarian food items.

Convenient packs to carry and consume food/ beverages while on the move.

Other 3 Ps for Service IndustryPeople: The employees in McDonald’s have a standard uniform and McDonald’s specially focuses on friendly and prompt service to its customers from their employees.

Process: The food manufacturing process at McDonald’s is completely transparent i.e. the whole process is visible to the customers. In fact, the fast food joint allows its customers to view and judge the hygienic standards at McDonald’s by allowing them to enter the area where the process takes place. The customers are invited to check the ingredients used in food.

Physical evidence: McDonalds focuses on clean and hygienic interiors of is outlets and at the same time the interiors are attractive and the fast food joint maintains a proper decorum at its joints. In addition to it free Wi-Fi Internet service at some selected outlets is also being offered.

Mc-Donald’s

Quick Service Layout

Customer and Management Views

We visited the nearest McDonald’s outlet at Ansal Plaza and we got following replies by Manager and Customer.

As per Floor Manager “Mr Rajeev Sharma” :

“Our core competencies include Quick Service, Economical Prices and cleanliness”

Combined response of some regular customers:

“McDonald’s is better than other fast food restaurants because of varieties in food items, convenient locations, lower prices and faster service.

So this small in store survey shows that McDonald's is able to deliver the value that most of the customers expect from it, which is the most important parameter for any service industry firm.