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Strategic MarketingGroup-7
Advait Bhobe (12020841116)
Anant Maheshwari (12020841119)
Deepak Kumar (12020841176)
Khalid Sheikh (12020841021)
Rashin Suri (12020841155)
Shaaz Kinikar (12020841163)
Siddharth Bhatnagar (12020841100)
Tanmay Nayak (12020841109)
Tarsh Midha (12020841112)
Dimensions of Market Selection
McDonald’s Entry in India- 1996
Market attractiveness in terms of size & growth
Market attractiveness in terms of size & growth
Source- AT Kearney, the management consultancy
In 1996, urban Indians in Mumbai and Delhi typically ate out three to fives times a month
After 12 years of its launch, average frequency had doubled and in 2011 the Indian quick service restaurant market was worth Rs 30,000/- crore (about $7bn at Rs 50 per dollar exchange rate).
Favourable market trends
Constantly growing income, GDP since economic reforms in 1991
Population growthAccording to census data, average population growth in 3 preceding decades was 3% till 1991 and 2 % in 2001
UrbanizationPercentage of urban population increased from 21% in 1975 to more than 28% in 2004
Led to a shift in traditional Indian food habitsPeople seek variety in their choice of foodsWillingness to spend more on international cuisines
Intensity of competition
1) Threats of New Entrants
• Creating a prominent brand name was a challenge
• High research and development costs• Few strong brands already in
competition such as Wimpy’s, Nirula’s etc.
2) Threats of Substitutes
• Very high substitutes• People can choose variety of products
Nirula’s, Wimpy, Indian Cuisine, Indian local shops, Indian Vegetarian restaurants.
3) Bargaining power of
customers
• Customers generally have low bargaining power through out the world in food industry.
• Mcdonald’s provided a standard service, one price strategy and quality of food
• Hence Bargaining power was low
:
4) Bargaining power of supplier
• Bargaining power of supplier in this industry was low.
• Situation could have been different if main ingredients were not available.
• But with McDonald’s simple menu and working with many suppliers, there was no threat.
• Hence bargaining power was relatively low.
5) Rivalry with in the Industry
• Fast food restaurant industry is very competitive in the unorganized sector.
• Many small businesses operating in abundance
• Many new brands were planning to enter the Indian Market like Dominos, Pizza Hut, KFC etc.
Loyalty of customersIndians were accustomed
to eating home made foods or snacks
No major food chain in the market at the time of
entryOnly Nirula’s was present
with very less market share
Major snacks across various geographies in India – samosas, chhole bhature, pakoda, dosa,
sambar vada
Competitors committed to defend their position
Initially, McDonalds targeted top 10% of the country, Wimpy and Nirula’s were the only major competitors in the segment
Nirula’s was the only competitor determined to defend itself. It provided
Burgers,
Pizzas
Foot longs
Ice cream parlour with 21 flavours
Operational and Cultural barriers
Operational barriers
Poor roads
Grim Power situation
Poor Supply chain systems
Cultural barriers– Pressure Groups
Anti Western Factions
Health Activists
Environmentalists
Animal Welfare Activists
Sons of Soil Campaigners
Cultural barriers- Inherent
Majority of Indians are vegetarians
Fast foods considered to be unhealthy
Various forms of differentiation
Customer Service Differentiation
Friendly, smiling fast service
Emphasis on cleanliness
Customers were given kitchen tours in early stages
User Experience Differentiation
Separate Veg and Non-veg kitchen with dedicated staff, preparation and wrapping
areas
Different uniforms for kitchen crew
In the beginning it had a policy of giving printed
brochures of RMS to customers
Brightly lit, casual and contemporary look
Value Add
Competitive pricing
Taste customized to suit Indian palate Fun place for kids and family Value meals to attract customers and for customers not
willing to spend on flagship products
Wimpy
• Mega meals• Rs 35
McDonalds
• Value meal, QuickBites and Softserve
• Rs 39, Rs 25, Rs 8
Business model implementation
Franchise Model
Quality, Service,
Cleanliness and Value
propositions
Training and
monitoring of its
franchises
Product Consistency
Sophisticated supplier networked operation
and distribution
system
Careful selection
and JVs with supplier and
logistics firms
Imperative Measures taken to ensure imperatives
There are 4 ways to achieve critical mass
Present everywhere, or nearly everywhere your best customers surf.
Providing sensitivity to local taste
Affordable prices
A family dining
Critical Mass
Critical mass can be achieved as McDonald’s understood the culture of India and McDonald’s worldwide is well known for the high degree of respect to the local culture.
McDonald’s initial menu was developed especially for India with vegetarian selections to suit Indian tasted and culture.
Keeping in line with this McDonald’s did not offer any beef and pork items in India.
ConclusionsMarket Attractiveness Highly Attractive
Market Trends FavourableCompetition Low and From unorganised sectorCustomer Loyalty Not loyalIs the competition competent to defend itself NoValue Addition High
Differentiation HighBusiness Model Franchise BasedBarriers Cultural and OperationalCritical Mass Was possible to achieve in future
• All the above factors point to that fact that the entry of McDonald’s in India was perfectly timed.
Counteroffensive Defense
FedEx vs. UPS
Counteroffensive Defense
It is a Defensive Marketing strategy used by a market leader where it responds to the attacker with a counter attack.
Counter-offense can take 3 forms:
Meet the attacker head-on
Attack the flank of the attacker
Launch a ‘pincer’ movement.
Background
FedEx started in 1973 as an overnight air carrier.
FedEx traditionally attributes its success and reputation to its unmatched performance in overnight deliveries.
UPS delivers an average of over 13 million packages each day and FedEx averages approximately 5 million daily deliveries.
However FedEx surpasses UPS in daily air deliveries, 3.1 million to 2 million of UPS.
Whereas UPS trumps FedEx in the ground shipping segment.
UPS: Attack on FedEx
With this they had entered the territory of FedEx.
Since then UPS air shipments have grown steadily.
In 1988, UPS received authorization from FAA to operate its own aircrafts.
UPS entered the overnight air delivery business, and by 1985 UPS Next Day Air service was available.
UPS began to assemble its own jet cargo fleet
Deregulation of the airline industry created new opportunities for UPS
The demand for air parcel delivery increased in the 1980s.
FedEx: Counter attack
In response to UPS it started investing heavily to improve on its ground and air services.
In 1998 they acquired
RPS: Small-package carrier
Viking Freight: Less-than-truckload carrier(Western US)
Caliber Logistics: Supply chain solutions
Roberts Express: Customized services
In 2001 they acquired
American Freightways Corp: Less-than-truckload carrier(Central and Eastern US).
FedEx Express and the U.S. Postal Service forge a public-private alliance.
It also started with night and Saturday deliveries at premium which was not offered by UPS at that time.
Conclusions
This acquisition spree to build up on the ground services helped FedEx to gain back some market share.
By August 2002, FedEx reported
A 33 % increase in package shipments
A 15 % jump in daily ground volume for fiscal year 2002.
Recommendations
FedEx was always positioned as a “Reliable”, where as UPS as “Cost efficient”.
FedEx could have launched new services, positioned as low cost servoce
This could have helped FedEx gain some more share from UPS.
Other Examples
HUL launched Wheel against Nirma
Gillette launched Trac 2 against Wilkinsons
Boeing 747-8i against Airbus A380
Toyota launched Lexus against Mercedes