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

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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