Psychological

segmentation –
McDonald's India.

-Mahesh D
Market Segmentation

is Generally known as the process of splitting customers,

or potential customers, in a market into different groups,
or segments, within which the customers share a similar
level of interest in the same or comparable sets of needs
satisfied by a distinct marketing proposition; it is also
explained as a marketing technique that targets a group
of customers with specific characteristics, i.e. a particular
group that has its own distinct customer profile and buyer
characteristics so that for marketing purposes, it can be
targeted separately from other segments of the market.

Market Segmentation can be done on the basis of the

location (Geographic Segmentation); on the basis of age,
income, gender and other measurable factors
(Demographic Segmentation); on the basis of lifestyle,
likes, dislikes, taste and preferences (Psychological
Segmentation); and according to the history, loyalty and
responsiveness (Behavioral Segmentation).
Why segment markets?

There are several important reasons why businesses

should attempt to segment their markets carefully. These
are summarized below -

Better matching of customer needs

Customer needs differ. Creating separate offers for each

segment makes sense and provides customers with a
better solution

Enhanced profits for business

Customers have different disposable income. They are,

therefore, different in how sensitive they are to price. By
segmenting markets, businesses can raise average prices
and subsequently enhance profits

Better opportunities for growth

Market segmentation can build sales. For example,

customers can be encouraged to "trade-up" after being
introduced to a particular product with an introductory,
lower-priced product

Retain more customers

Customer circumstances change, for example they grow
older, form families, change jobs or get promoted,
change their buying patterns. By marketing products that
appeal to customers at different stages of their life ("life-
cycle"), a business can retain customers who might
otherwise switch to competing products and brands

Target marketing communications

Businesses need to deliver their marketing message to a

relevant customer audience. If the target market is too
broad, there is a strong risk that (1) the key customers
are missed and (2) the cost of communicating to
customers becomes too high / unprofitable. By
segmenting markets, the target customer can be reached
more often and at lower cost

Gain share of the market segment

Unless a business has a strong or leading share of a

market, it is unlikely to be maximising its profitability.
Minor brands suffer from lack of scale economies in
production and marketing, pressures from distributors
and limited space on the shelves. Through careful
segmentation and targeting, businesses can often
achieve competitive production and marketing costs and
become the preferred choice of customers and
distributors. In other words, segmentation offers the
opportunity for smaller firms to compete with bigger
ones.

Psychographic Segmentation -

Psychographic segmentation is one of the important

segment amongst the various market segmentation

Psychographic segmentation is a method of dividing

markets on the bases of the psychology and lifestyle
habits of customers. It is the marketers and the sellers of
products and commodities who use this technique in
order to decide their marketing strategy. Marketing a
product requires a deep understanding of the customers
psychology, along with their needs, in order for the
product to be accepted. Marketers carry out a number of
activities in order to better understand the psyche and
the habits of the customers, so that they can accurately
predict the response to the product they are selling, and
thus make accurate sales projections. This is the primary
use of psychographic segmentation
Psychographic Segmentation Definition

When a producer decides to market a product, he has to

realize that there are a lot of differences between
customers of different localities, ages and nationalities.
Thus, he has to divide the market into various segments,
and target each segment individually so as to maximize
sales. These segments are divided on a variety of factors
like age, sex, lifestyle, income level and psychology.

Psychographic segmentation plays on the psychology of

the potential customers and helps the seller determine
how he must approach customers belonging to a
particular segment.

Psychographic variables are also known as IAO variables -

Interests, Activities and Opinions. The seller needs to
analyze these 3 factors primarily in order to understand
the psyche of the customers. Then he can adopt a
suitable marketing strategy, or he can alter an existing
marketing strategy. The habits that consumers generally
display with regard to a certain class of products will
determine their reaction to the product that a seller is
offering them.

Psychographic Segmentation Variables

The variables that come into play when we speak of
psychographic segmentation are primarily psychological
in nature. The following variables could be said to be a
part of the process of psychographic segmentation.

• Interests
 • Activities
• Opinions
• Behavioral patterns
• Habits
• Lifestyle
• Perception of selling company
• Hobbies

Using these factors as a base, a marketer can determine

how a particular group of customers will respond to the
launch of a new product.

McDonald's India: As Indian as you and me

McDonald's in India is a locally owned and managed
company run by Indians, employing local staff, procures
from local suppliers to serve its customers. McDonald's
India opened its first family restaurant at Basant Lok in
Oct, 1996; today it has 169 Restaurants across India. This
vibrant decade has seen McDonald's evolve Indian
menus, Indian sensitivities and yet remain as globally
innovative as ever. This journey has seen McDonald's
develop a rich brand identity amongst its customers and
employees as well as partners alike.

McDonald’s India have had a single mantra:

providing 100% total customer satisfaction and the
formula for achieving this goal in our restaurant operation
is the long-standing commitment to the McDonald’s
Promise.
Global fast food major McDonald's says it survived and
expanded in India by developing innovative menus to
cater to the Indian taste bud, something it has not done
anywhere else in the world.

As it completes 10 years of serving burgers, wraps and

French fries in India, initially against opposition from
nationalists, the firm has major growth plans, to double
its turnover every three years in the next decade.

Food preferences in india –

Unlike many other well populated coutries, India has a

very diverse population. Each region in India has
completely different food traditions and preferences.
Indian consumers typically maintain their distinct food
habits even after migrating to different parts of the
country. For example north Indian would mostly prefer
pav bhaji or samosa wherein south Indians would mostly
prefer idli dosa as snacks or breakfast. In large cities and
metropolitan areas, some restaurants serve only
specialty regional foods. Some regional fast foods such as
samosa, kababs, chola bhatura, pakoda, aloo-paratha,
poori-bhaji, dosa, andsambar- vada are popular among
Indian consumers and are available in both specialty and
multi-cuisine restaurants throughout India

Also most Indians prefer to eat home-cooked foods and

take immense pride in the varieties of food cooked at
home. For most Indians, home-cooked foods are
considered fresh, healthy, and inexpensive. Given the
distinct dietary habits and food preference of Indian
consumers.

Keeping the food preference in mind McDonald’s has

introduced several new products specifically for Indian
consumers in order to get accepted and successfully
blend into local Indian culture. Of course, introducing
local products for the local palate is not a new concept at
McDonald’s. The Teriyaki Burger in Japan, Croque McDo in
France, the Maharani Burger in Malaysia, a green pepper
burger in Singapore, a Thai burger with a Thai curry
paste, spaghetti in the Philippines, spicy chicken with rice
in Indonesia, and spicy seafood noodle in China are some
of the examples of its localization strategy. And for indian
customers McDonald’s had launched products which
meets taste and satisfaction.

“Most Indians prefer to have their breakfast at home and

it is a challenging job to change that habit. But we clearly
see an opportunity in this segment. We feel breakfast will
see the kind of success we have seen in burgers,"

says Amit Jatia, managing director,

Culture sensitivity –
Given the fact that an overwhelming majority of Indians
(about 83%) do not eat beef or pork, the introduction of
the Maharaja Mac (a mutton-based burger) by
McDonald’s seems to be an appropriate cultural fit.
Contrary to popular belief, however, India is not a
predominantly vegetarian country. About 20% of India’s
population is completely vegetarian (Exhibit 11). A closer
look at state-level food habits in India reveals that food
preferences vary widely among the country’s 30 states
and six union territories.
About 69% of Gujrat is vegetarian; 60% of Rajasthan;
54% of Punjab and Haryana; 50% of Uttar Pradesh; 45%
of Madhya Pradesh; 34% of Karnataka; 30% of
Maharashtra; 21% of Tamil Nadu; 16% Andhra Pradesh
and Delhi; 15% of Assam; 6% of Kerala, Orissa, Bihar, and
West Bengal; and less than 5% in northeastern
states/union territories (Manipur, Mizoran, Nagaland, and
Arunachal Pradesh). While part of this vegetarianism is
economic, a more compelling force is ethical and even
religious. Jains avoid meat totally, while many Buddhists
in India are vegetarian. Brahmins, Saivite non-Brahmins
of South India and several Vaishnavite sects across the
country avoid meat. Interestingly, though, Brah- mins of
East India, Kashmir, and the Saraswats of the southwest
eat fish and mutton. But even among meat-eaters, beef is
taboo.
Maharaja Mac (India)

When McDonald’s replaced its beef-based Big Mac with

the mutton-based Maharaja Mac in India, skeptics shook
their heads. After all, no one had ever successfully
marketed a burger made of anything other than beef. But
McDonald’s faced a dilemma: how to sell hamburgers in a
culture where the cow is sacred. As it turned out, the
mutton burger was a tremendous hit. In addition to the
Maharaja Mac, the company now sells cottage cheese
wraps and potato patties to its growing Hindu clientele.
This success has allowed McDonald’s to shape and grow
the Indian fast food market while capturing a large slice
of the growing pie.
McDonald's India Goes Veggie –

McDonald's announced a big India expansion, which is

mind-blowing when you consider the fact that India is a
vegetarian country. McDonald's has built a primarily
veggie-lover’s menu, with only a few exceptions, such as
the Chicken Mahraja Mac.
The menu in India has absolutely no beef or pork on it, in
deference to the local belief that cows are sacred
animals. McDonald's ability to adapt to this meat-less
culture is extraordinary when you consider the fact that it
is best known as the chain that sells billions of
hamburgers a year. Just as the company does
everywhere it goes, it gives the Indian people what they
want and does it better than almost anyone else

The biggest challenge the American franchise faced in

India was how to reach the large vegetarian population of
India for which it had to reengineer its products and yet
maintain international brand value.

So in 1999 it came up with 'McAloo Tikki Burger' - a

burger unheard of anywhere else. The burger changed
entire segment of people who is completely vegetarian
and always prefer eating Indian chats.

"Today the McAloo Tikki Burger is the single highest

selling product and is one of the first products to be
exported to the Middle East due to high demand," said
Bakshi, speaking at his corporate office in Jor Bagh.

The McAloo Tikki has indeed won over numerous Indians.

Said Sulakshana Monga, a New Delhi-based fashion

designer: "I just love biting into Veg Surprise, and McAloo
Tikki is my all-time favourite. They are the best."
Some other Indian McDonald products –
Product Positioning –

“Mc Donald’s mein hai kuch baat” projects was aiming

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”. This 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. And hence most of Indian families
started preferring Mc Donald’s as family meal and
changed the entire style of having a short snack, lunch or
a heavy meal.
Family and Child restaurant Strategy.

In India, McDonald’s has positioned itself as a family

restaurant. Family has become the cornerstone of its
strategy. Its outlets are called “McDonald’s Family
Restaurants,” as opposed to simply McDonald’s as in other
parts of the world. McDonald’s restaurants provide a
clean, comfortable, and stress-free envi- ronment
especially suited for working families. With India’s
changing family system in metropolitan cities, where the
extended family is no longer the preferred way of living,
McDonald’s has become an attractive place for working
and busy young parents on weekdays. On weekends,
residents of Delhi and Mumbai bring their children to
McDonald’s so that they can relax, while their children
play in McDonald’s hugely popular play places.
Like its other worldwide locations, McDonald’s targets
children as their main clientele in India. Children in India
may not have the purchasing power comparable to their
Western counterparts, but they are still the center of the
universe in the Indian family system, and they can
actually pull the parents to visit a place time and again.
Children are an enormously powerful medium for
relationship building in India. They not only influence
markets in terms of the parental decision-making to buy
certain kinds of products, they are also future consumers.
After all, brand impressions, once formed, can stay for a
lifetime.
McDonald’s also promotes birthday parties complete with
cake, candles, and toys in television advertising aimed
directly at kids. In some Indian cities like Mumbai, Delhi,
and Bangalore, birthday parties are all the rage for
upwardly mobile youngsters. Given that most young
people in these cities live in small, overcrowded flats,
McDonald’s has become a convenient and welcoming
place for birthday celebrations
Mc Donald’s drive-through –

is a type of service provided by a business that allows

customers to purchase products without leaving their
cars. The format was first pioneered in the United States
in the 1930’s but has since spread to other countries.

Orders are generally placed using a microphone and

picked up in person at the window. A drive-through is
different from a drive-in in several ways— The cars create
a line and move in one direction in drive-thru’s, and do
not park, whereas drive-ins allow cars to park next to
each other, the food is generally brought to the window
by a server, called a carhop, and the customer can
remain in the parked car to eat.

This bought a change in the lifestyle of consumers. As

most of the indian places has more of parking problems,
this method of drive thru as resolved the problem of
consumers having an issue with parking if the parking is
full. This service is also helpful to most of the Indian folks
who are very engaged in their daily work and give less
time for their breakfast and snacks. For e.g. corporate
employees who prefer having breakfast on their desk or
in pantry in much quicker way and also to most of the
consumers who stay away from their family and give less
time to cook food at home and prefer having food at
home and hence grab a burger while driving back home.

Mc Donald’s financial highlights of last 6 years –

Why Is McDonalds So Successful?

There are approximately 22,000 registered restaurants in

India. In addition, there are more than 100,000dhabas
(small roadside food stalls) that sell a variety of foods in
cities and on highways. By 1998, there were
approximately 1,568 registered hotels in India, half of
which have their own restau- rants. In addition, large to
medium-range canteens serve the food needs of various
institutions such as hospitals, prisons, defense
establishments, schools, colleges and universities,
railways, airlines, govern- ment establishments, and
private companies.

After all the tuff condition of the market McDonalds

reason to achieve its success today is the ability to adapt
to lifestyle and the market conditions. They are able to
react based on the demands of the consumers. They are
able to provide what the customers want and that is the
most important factor of all because without the
consumers, they will not succeed. Systems, people and
ability to give what the customers want are the reasons
why McDonalds is as successful as it is today.

Refrences – websites Macdonalindia.com , aboutmcdonalds. Books - Philip kotler.

SWOT Analysis -

Strengths
• McDonalds has built up huge brand equity. It is the
No. 1 fast-food company by sales, with more than
31,000 restaurants serving burgers and fries in
almost 120 countries. Sales, 2007 (11,4009 million),
5.6% sales growth.
• Good innovation and product development. It
continually innovates to retain customers in the
business.
• The McDonalds brand offers consumers choice,
reasonable value and great service
• Large amounts of investment have gone into
supporting its franchise network, 75% of stores are
franchises.
• Loyal staff and strong management team give a very
good customer satisfaction.

Weaknesses
• Core product line out of line with the trend towards
healthier lifestyles for adults and children. Product
line heavily focused towards hot food and burgers.
• Seasonal
 • Quality issues across the franchise network.

Opportunities
• Joint ventures with retailers where in MC Donald
products can be reached to any close by super
markets.
• Respond to social changes - by innovation within
healthier lifestyle foods. Its move into hot baguettes
and healthier snacks (fruit) has supported its new
positioning.
• Strengthen its value proposition and offering, to
encourage customers who visit coffee shops into
McDonalds.
• The new “formats”, McCafe, having Wifi internet links
should help in attracting segments. Also installing
children’s play-parks and its focus on educating
consumers about health, fitness.
• Continued focus on corporate social responsibility,
reducing the impact on the environment and
community linkages.
• International expansion into emerging markets of
China and India.
Threats
• Social changes - Government, consumer groups
encouraging balanced meals, 5 a day fruit and
vegetables.
• Focus by consumers on nutrition and healthier
lifestyles.
• Competitive pressures on the high street as new
entrants offering value and greater product ranges
and healthier lifestyles products. E.g. subway,
supermarkets, M&S.
• Recession or down turn in economy may affect the
retailer sales, as household budgets tighten reducing
spend and number of visitors.
Recommendation –