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COURSE TITLE: STRATEGIC GLOBAL MARKETING STRATEGY (7BU027)

STUDENT NAME: BABAJIDE ADETORO

STUDENT ID: 2223415

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Title page:

McDonald’s Global Marketing Strategy: India and China as a case study.

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Table of Contents
1. Front Page ………………………………………………………………………….. 1
2. Title page ……………………………………………………………………….…… 2
3. Table of contents …………………………………………………………………….. 3
4. Introduction …………………………………………………………………………. 4
5. SCLEPT analysis of McDonald………………………..……………….…………… 5
6. Micro environment analysis of McDonald in India and China…………..….….…… 7
7. Market entry strategy in India and China ..………….…..…..…..………….………. 9
8. Marketing mix decision for India and China …...…………………………………. 14
9. Conclusion …………………………………………………….……………………. 17
10. References ……………………………………………..…………………………… 18

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1.0 Introduction
The McDonald's Corporation is a network of quick-service restaurants that is famous all over
the world. Richard and Maurice McDonald opened their first restaurant in 1940 in the
California region of the United States of America. Since that time, the company has expanded
internationally into over 121 countries, opening a total of around 40,000 outlets worldwide,
and the number is continually growing. McDonald's International employs more than 1.5
million people and provides its services to about 96 percent of the entire population of the
globe (McDonald's Annual report, 2019).
McDonald has maintained a strategy of "grow at all costs," which has been a huge boost in
the company's expansion aspirations and resulted in an aggressive expansion plan that has
been successful in both local and international markets since the company's beginning. (Love,
1995). According to Leonhard (1998), around sixty percent of McDonald's current earnings
originates from outlets located in other countries. There is a gap between McDonald's
worldwide sales and profitability due to the fact that the company dominates the market in
other countries to a significant extent. In 96% of the countries in which it does business,
McDonald's is the undisputed leader in the fast food sector. Furthermore, McDonald's market
share in other nations regularly reaches 50%. In the past, McDonald's rivals have not been as
effective in diminishing their market share in other countries as they have been in the United
States. However, this is starting to change as McDonald's continues to innovate and improve
their products and services. What plan has McDonald's used to fulfil its international
marketing goals? This essay's goal is to examine McDonald's strategy for accelerating its
international growth - using India and China as a case study. To better understand how
McDonald's entered into the Chinese and Indian fast food markets, this effort will analyse
their marketing approach.

Figure 1: McDonald's logo sourced from McDonald website.

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2.0 SCLEPT Analysis of the Indian and Chinese fast food market

The term "marketing environment" refers to the context in which a company conducts its
marketing (Lee and Carter, 2011). The marketing environment encompasses all aspects that
have an impact on the company's operations, manufacturing process, commerce, and
customer behaviour (Lee and Carter, 2011). Zeeman and Bogdan (2019) believe that the
formulation of a marketing plan needs to be very thorough. McDonald can use SCLEPT
analysis to figure out how certain external forces affect the competition in their industry and
how such forces can help them make an all-inclusive decision. (Valaskova, Bartosova,
Kubala, 2019).

SCLEPT CHINA INDIA SOURCES


Socio-cultural
Population Population
1,455,689,371 1,419,978,034 (CIA, 2022)

Diverse – Chinese Ethnic Groups –


91.6% Indo-Aryan 72%
Dravidian 25%
Mongoloid and
Other Minority
Groups
Language – Language – Hindi
Mandarin.

Religion – Mixed. Religion – mixed, (NSC, 2018)


79.8% into
Hinduism
(WHO, 2017)
Obesity – 5 to 6% Obesity – 40.3%

Healthy Lifestyle Literacy – 77.7% (Zeman & Bodgan,


Migration to 2019)
metropolitan towns
for better living and
opportunities.
Legal Corporate tax rate
The government averaging below (CIA 2022)
introduced a Higher 35%.
minimum Wage
Obstructive
Animal welfare regulations, such as
regulatory effect on

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supply chain. operating hours and
. working hours for
women.

Economic
GDP/Capita GDP Per Capita -(IMF, 2023)
$23, 382 $9,073

Inflation 2.8% Inflation -4.25% (CPI, 2023)

Unemployment Unemployment
5.3% 7.7% of the total (BBC, 2022)
population

Cost of living is
rising.

Political Socialist Stable political


government takes climate.
away land from
100% FDI allowed
users arbitrarily.
for food product
produced in India. (Kaur Rajwinder,
Stable fiscal policy. 2015)

Technology Electrification Electrification 100% (CIA, 2022)


100% -Telephone 1173.83
million
Telephone
estimated 1.7 Mobile – 43,000,000
Billion

Mobile 80.967 Internet 5G Network

Internet – 5G
Network

Cable - Media Cable – Media


108.854 528 178,000,000 Internet
Internet user. User

Transportation – Transportation 85%


70% of roads are paved roads
paved.

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According to the findings of the SCLEPT research, these two nations are distinct from one

another in a number of important respects. The eating of beef is illegal in India being a nation

that has a large Hindu population, and China, on its own, has animal welfare restrictions that

have a constantly negative influence on the supply chain. In addition, India has a large Hindu

population. India has a great range of ethnic groups as a consequence of migration, and each

of these individuals has their own preferences, some of which are impacted by their religion

while others lead active lives (Zeman & Bodgan, 2019). The use of technology exemplifies

how geographically near these nations are to one another. These distinctions have had an

effect on the marketing strategies that McDonald's has used in both nations in order to sell its

wares. As a result of these differences, McDonald's has developed a geocentric mentality,

which involves standardising some aspects of their messaging and changing their marketing

approach to cater to the requirements of certain locations. "A geocentric company establishes

a worldwide strategy that adopts a plan based on a standardised identity and well-

communicated values, but then blends standardised and adaptive portions of the marketing

offer" in order to successfully satisfy the vast variety of customer expectations. (Doole,

Lowe, and Kenyon, 2019)

3.0 Micro analysis

This will be studied along the lines of analysing the conduct of consumers as well as the level

of industrial competitiveness across the two nations.

3.1 Consumer analysis:

India

Conducting research about customers is essential to the success of any product. India is the

country that has the second-highest population of any nation on the planet. The population of

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India is more than one billion people. The majority of India's population now resides in the

country's urban areas. Even though people's typical incomes are very modest, they

nevertheless like dining at restaurants.McDonald's chooses its clients in India according to

the demands they have, their spending capacity, the reasons they shop, and the stores they

choose to frequent. MacDonald evaluates the client by concentrating on the client throughout

a wide variety of business subfields. As a result of the nation's rising economy, India's middle

class is increasing everyday, and consumers there are getting more acquainted with brands

thanks to the Internet, TV, newspapers, radio, magazines, etc.

China

Being associated with Western culture was a key element in McDonald's success in China.

Because of this, the brand's Chinese menu when it first entered the Chinese market was

mostly equivalent to its American or European counterparts. To attract Chinese customers

and lower production costs, the company made a few changes.

At McDonald's restaurants in China, you may get a wide variety of Chinese specialties such

youtiao (Chinese deep-fried dough) and cakes with taro filling (a type of sweet potato).

Along with being used to make tea, green tea also gives sweets and hamburger buns a vivid

green hue.

The initial letter of the hamburger's Chinese name itself is noteworthy since it may be read as

"China" or "Chinese," which would imply some degree of cultural tie.

Chinese video games were used as inspiration for the meal packaging used by McDonald's to

advertise in that country. The McDonald's menu options in China must also adapt to the

availability of ingredients in the regional market. Because real cheese is expensive in China,

Chinese hamburgers use rubber-like cheese substitutes instead. Chinese customers cannot

notice the difference since they do not consume cheese very often; nevertheless, foreigners

will be able to distinguish it immediately away.

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3.2 Industry Competition analysis:

India

McDonald's has long dominated the fast food industry in India. In India, KFC is one of

McDonald's main rivals for fast service hamburgers. Domino's, Pizza Hut, Subway, Jumbo

King and other fast food outlets are competitors of McDonald's in India. Due to the shrinking

market share of these competitors in India, McDonald's is now dealing with new difficulties.

Jumbo King competes in the fast food industry by using a simple strategy of quickly

delivering hamburgers to customers who are strapped for time. In order to compete with its

competition, McDonald targets its consumers using three separate segmentations based on

their needs, preferences, and tastes. Due to the uniqueness and variety of the products it

offered, McDonald's in India had a dominant position in the nation and had an advantage

over its rivals.

China

The greatest rival to McDonald's in China is KFC, another major American fast food chain.

KFC performs very well in China, where 8,441 locations were active as of March 31, 2022.

This amount is far more than the 3,977 KFC locations in the US. Along with American fried

chicken, Starbucks, a premium coffee brand from the United States, is expanding quickly

here. Starbucks has 5,360 locations in China compared to McDonald's 4,395 in 2021.

Good news does exist for McDonald's in China, however. McDonald's unit count is

increasing more quickly than those of KFC and Starbucks, despite having lost the top spot in

today's figures. From 3,787 in March 2020 to 4,395 in March 2021, the number of

McDonald's locations climbed by 16%, while KFC and Starbucks increased by 14%.

Occasionally, McDonald's introduces novel goods just for the Chinese market. The

corporation posts promotional films on social media, particularly around significant cultural

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occasions like Chinese New Year. These videos use aspects of Chinese heritage to evoke

emotional responses from viewers towards the brand's goods.

4.0 Market Entry Strategy

Given that McDonald's businesses across the globe today contribute a significant portion to
the total income of the corporation, it is essential to investigate how the chain first broke into
international markets. McDonald's entered the global market via the establishment of
franchises, joint ventures, and company-owned stores.

When McDonald's had the option to choose from, franchising was not only preferred, but it
also had a significant effect on the company's expansion. According to information on the
corporate website, franchisees currently own 73% of McDonald's restaurants worldwide. It
is necessary to analyse the concept of franchising to comprehend how essential it was to
McDonald's rapid expansion into China and India. McDonald's restaurants have expanded
internationally much more rapidly than other retail industries, and this is solely due to
franchising. However, McDonald's was acquainted with the concept of franchising.
McDonald's development in the United States began very early in the company's inception
(Love, 1995) by utilising franchising, a relatively innovative business strategy at the time.

The fast food industry, and McDonald's in particular, was responsible for transforming
franchising into a business model that would revolutionise the global retail industry. A
franchise agreement is based on two parties' desire to earn while minimizing risk. Without
using its own money, the franchiser aspires to grow an already successful company. Without
going it alone and betting everything on a novel concept, the franchisee wishes to manage a
firm. One offers a name in the industry, a strategy, knowledge, and access to resources. One
contributes the money while carrying out the duty (Schlosser, 1998). McDonald's, in this
instance, seeks to have a worldwide footprint without running the very high risk of traveling
to other nations and upsetting local eating traditions. McDonald's understood that in order to
access international markets successfully, an American fast food company would require the
assistance of local collaborators. This is precisely what franchising allowed McDonald's to
accomplish.

McDonald's may decide to present itself as a local small-town company rather than an
American international conglomerate in order to capitalise on the franchising opportunity.
They produced the world's quickest-growing fast food business, which they ran themselves.

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Those individuals who are willing to comply with the requirements and pay the franchise fees
will have access to a vast selection of vendors, cutting-edge technology, and a track record of
outstanding achievements.

4.1 China market entry strategy

McDonald's entered the Chinese market via franchising. According to Franchise (2012), the
prevalence of franchising in China began to rise in the late 1980s. It went through a phase of
chaotic growth. Numerous franchisors engaged in unethical business practises and even
mislead franchisees as a result of the negative legal climate. Franchisees sometimes fail to
make payments to their franchisors or infringe on their intellectual property rights. The 1997
enactment of the Ministry of Internal Trade's Regulation on Commercial Franchise Business
was China's first franchise law. This Act specifies criteria for intellectual property protection,
copyrights, and trademarks, among other things (Franchise, 2012).

Mainland's first McDonald's Three years after the first KFC restaurant opened in Beijing in
1987, In October 1990, China made its international debut in Shenzhen, Guangdong province
(Wikipedia, 2012; Franchise, 2012). The biggest McDonald's in the world, with over 700
seats, opened in Beijing in 1992. (Wikipedia, 2012). Shanghai McDonald's reportedly broke
the previous record by constructing 200 new locations in China in 2011, propelling
McDonald's to the third-largest market on the planet. In China, McDonald's will increase its
spending. According to predictions, total investment in China would increase by 50% in 2012
compared to 2011. The funds will mostly be used to build new restaurants, spruce up the
outsides of already-operational companies, and speed up services. McDonalds China intended
to establish an additional 225–250 restaurants in 2012 (McDonalds China, 2012).

4.2 India’s market entry strategy

According to Euro monitor and RNCOS, McDonald's is one of the most prominent
enterprises entering India. The food franchise industry in India is expanding at a phenomenal
rate of 25–30% per year and is unaffected by the global economic downturn (Fransmart,
2012). According to Fransmart, even at the above course, there is a widening chasm between
India, the country's largest consumer market, and the shortage of outstanding food franchise
options. Numerous overseas multinational brands have numerous options to launch
enterprises in India as a result of this expansion. The annual Franchising World Top 100
study found that this growth rate would remain stable for the foreseeable future. Currently,
over 1000 franchised brands operate in India. The study also noted that franchising was

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among the best ways to reach the Indian consumer market with businesses and brands
(Franchise Business, 2012). The majority of businesses have chosen this route to enter the
sizable Indian consumer market since the franchising sector in India has been developing
positively as well. Deputy Commercial Counselor Dale Tasharski of the American Embassy
in New Delhi estimates that 71% of Indians are under the age of 35. The educated, modern,
and social Indian middle class is expanding rapidly. They have supplanted India's top earners
in terms of income, and they prefer fast food franchises owned by the United States. The
widening disparity between the supply and demand for food franchises offers expansion-
minded US food franchises and well-capitalized Indian business proprietors a unique
opportunity for profit (Fransmart, 2012). McDonald's first foray into the Indian market
occurred in 1996, when it opened a location in New Delhi. (Wikipedia, 2012).

4.3 Segmentation

Market segmentation is the strategy whereby a company divides a market into subcategories
that are likely to exhibit similar responses to marketing inputs. (Doole, Lowe, and Kenyon,
2019)

Targeting

Selling to specific groups identified via segmentation is known as targeting. Marketers need
to be able to strike a balance between creating a company culture and understanding segment
size and expected profitability. While segmentation is the process of dividing a population
into categories based on specific characteristics, targeting is the practise of selling products to
specific groups that have been identified as a result of segmentation. Choosing the marketing
combination that will appeal to the target audience the most is a crucial aspect of positioning.
Therefore, children, adolescents, and young urban families are the target market in both
nations.

China targeting

McDonalds’ makes use of multiple segment in terms of demographic, behavioural and


psycholographics at the same time. Emphasis is always on ways to develop items that appeal
to the need of each segment according to the dynamics of consumers’ tastes and preferences.

Segmentation variables Target

Demographic 6-70;

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Males and females;

Students, employees and professionals;

Young single people, new couples without


kids, couples with kids of at least 6 years of
age.

Psycholographic Status: Lower, working and middle class

Lifestyle: Mainstreamer and Struggling


individuals

Behavioral Regular fast food eaters

India Targeting

While Mcdonalds use the same adaptive targeting in all their markets, the major influence on
the targeting model in India is the vegetarian nature of the consumers, which means that a lot
of consumers tend to reduce meat intake from a particular age (Pew research survey, 2021)

Segmentation variables Target

Demographic 8-45;

Males and females;

Students, employees and professionals;

Young single people, new couples without


kids, couples with kids of at least 6 years of
age.

Psycholographic Status: Lower, working and upper class

Lifestyle: Mainstreamer and Struggling


individuals

Behavioral Regular fast food eaters

Positioning

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Positioning has to do with the rating or perspectives of consumers about the company’s
product. To achieve this, a brand must be creative and give consumers striking ideas that will
not leave them easily (Tudor, and Negricea, 2012)

China

McDonald's employs adaptive product positioning by often changing their offers in response
to market trends in China. This requires focus and being abreast of happenings in the country
to enable it adapt accordingly. This strategy is aimed at positioning the brand ahead of its
major competitors and particularly to present itself as being sympathetic of the people’s
economic situation, especially where it appears that the peoples’ spending power dwindles.
(2020 McDonald Annual Report)

In contrast, McDonald's has consistently marketed itself in India as a "Family Restaurant."


They did, however, develop their moderately priced "Happy Price" and "Happy Meal" menus
and establish themselves as a restaurant chain that serves children and teenagers a quick
meal. (McDonald's Annual Report of 2012)

5.0 Marketing Mix Decisions of McDonalds

Standardization and adaption strategies are typically at the center of the discussion when
considering global marketing strategy. While Szymanski et al. (1993) defined standardization
as a consistent and uniform method to allocating resources across the variables of the
marketing mix across markets throughout the country, Viswanathan and Dickson (2007)
defined it as a comprehensive promotional effort. A standardization strategy, according to
Jeannet and Hennessey (1998), is the formulation of a consistent plan for a product, service,
or company throughout the whole global market, which comprises of numerous marketplaces
spanning countries or states. According to proponents of the standardised global marketing
strategy, as the world grows increasingly similar, buyers in all global markets have the same
preferences and expectations. (Levitt, 1983, 1984).

Given the distinct characteristics of some markets, a global brand should actively try to
modify its strategy in the light of the reality that even markets and goods that seem to be
comparable internationally can have slight variations from one area to the next that might
impact their adoption by potential customers worldwide. (Kotler, 1986).

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McDonald's worldwide success, according to Vignali (2001), has been due to the use of
franchising, as it allows residents to swiftly adopt the US brand culture in terms of goods and
services. The marketing mix—product, price, promotion, and place—must be developed with
these crucial customers in mind, according to McDonald's (McDonald's UK, 2012). The
consistency of McDonald's goods and services defines their marketing approach. In contrast,
McDonald's must respect regional traditions and religious constraints in places like India.
(Goyal and Singh, 2007).

The main factors will be considered along the line of Products, pricing, promotion and place.

● Product

McDonald's UK (2012) asserts that it is crucial to remember that potential consumers have a
choice of spending options when showing menu items to them. Therefore, McDonald's
meticulously considers the design of a menu that consumers want. Under these conditions,
market research is essential. In contrast, client expectations may change over time.
Understanding the product life cycle and keeping track of customer preferences are crucial to
the success of a business (McDonald's UK, 2012). To keep up with changing consumer
tastes, McDonald's must gradually phase out obsolete goods while introducing new ones.

● Pricing

There are workable alternatives to multiple pricing systems. McDonald's UK (2012) asserts
that a key factor in pricing is the consumer's impression of value. Customers form their own
opinions regarding the worth of a product. As a marketing strategy, employing reduced prices
carries the risk that consumers will associate them with inferior quality. We must have in-
depth understanding of the brand's reputation in order to set prices. Otherwise, we run the
danger of lowering our profit margin while keeping up our sales.

● Promotion

Advertising, sales promotions, point-of-sale displays, merchandising, direct mail,


telemarketing, exhibitions, seminars, loyalty programmes, door deliveries, and
demonstrations are among McDonald's marketing strategies (McDonald's UK, 2012).
Newspapers and periodicals, as well as television, radio, cinema, the internet, and poster
sites, all include advertising. Advertising's three basic aims are to raise product or service
knowledge, favorable attitudes about it, and to aid with remembering.

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● Place

The location at which a consumer purchases a product or service. McDonald's UK (2012)


asserts that place is a component of the marketing blend that goes beyond a product's tangible
location or distribution points. In order to deliver products to the final consumer, it is
necessary to manage a number of processes.

5.1 McDonald Glocalization Strategy between China and India

McDonald's global strategy includes franchise development. Every McDonald's store has
unique and consistent operating aspects. Despite their different cultures and social norms,
McDonald's China and McDonald's India employ the 4Ps marketing blend in remarkably
similar methods. Due to the franchisor's influence on company operations choices, many of
the original principles are still in use in various regions of China and India. Burgers (available
in a variety of flavours), french fries, soft beverages, and desserts are McDonald's menu
staples. In China and India, all McDonald's locations continue to serve the current menu. In
McDonald's self-service system, customers place their orders at the counter, pay, and then
transport their food to a table or to go. China and India have McDonald's restaurants with the
same exterior and interior design as the rest of the world. In contrast, the table below
illustrates significant differences between McDonald's Glocalization strategies in China and
India.

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Marketing mix China India

Product ● Culture and ● Preference and


preference dictate the culture led to the
consumption of consumption of
cattle, pork, fish, and poultry but not beef
poultry. or swine.
● A flavor that is less ● Preferred Taste -
salty, less seared, and Spicy
less piquant. ● Product Division -
● Province-dependent Vegetarian and non-
Product Division. vegetarian

Price ● Compared to ● Implemented a


standard quick food pricing strategy to
restaurants, the price address each market
structure is segment individually.
considerably more ● Branded
expensive. Affordability items
● In a problematic serve the lower class
economic of customers, whilst
environment, the products with a core
price should be value brand appeal to
adjusted lightly. No the middle class.
price segmentation.

Place ● Five-hundred- ● The companies are


thousand-plus conveniently
residents within five positioned and
kilometers was widely dispersed
formerly a around the city.
fundamental criterion
for outlet location
selection. Now
altered to identify the
bustling commercial
area outlet under
construction.

Promotion ● Increased focus on ● More emphasis on


networks and the conventional and
web as a method. publishing media.
● New and more recent ● Goals and Objectives
generations' - Children and
objectives. children.
● Others - Make use of ● Others - Raise
network resources audience awareness
and provide a range of the issue, create a
of function activities nice atmosphere, and
to draw in younger make an effort to
clients. maintain the
● Bring in fresh, audience's positive
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6.0 Conclusion

McDonald's has quickly become one of the most prosperous enterprises in the world. The
incorporation of globalisation into the business strategy has enabled it to accomplish and
maintain a high level of growth. It is also going to keep looking at its many growth potential
throughout the course of the next years, beginning with the establishment of the business in
the United States and continuing through its subsequent growth into other nations such as
England, Australia, and most notably India and China. McDonald's has perfected the practise
of localization, also known as adaption, in order to serve its customers in China and India
with an exceptional level of service. It is crucial to underline that McDonald's has evolved
into a luxury brand, particularly among members of the middle class, who are now more self-
confident in the knowledge that they, too, can afford to eat at high-quality locations. As the
company continues to modify its operations in response to shifting conditions throughout the
world, especially in the United States, it is imperative that it investigate ways to connect with
the working poor.

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