The purpose of this assignment is to evaluate the challenges faced by marketers in promoting the products and services to the target audiences under the Multi-Domestic Market Concept. This report mainly will evaluate and compare the strategies adapted by McDonalds in marketing its burgers in China and India according to the Multi-Domestic Market Concept.

The first part of the report will give the introduction about the McDonalds and its burgers selling in India and China. The second part of the report will give PESTEL analysis of these two countries covering economy, demography, geography and cultural aspects. The third part will give a comparison of the marketing mix strategies adapted by McDonalds in these two markets. The last part of the report will give evaluation of the strategies adapted by McDonalds in China and India markets.

2.0 Introduction

Today, most business activities are global in scope. Every business must be prepared to compete in an increasingly interdependent global economic environment. It is important to be aware of the effects of these trends when managing a multinational conglomerate or a domestic company that exports. Hence, the multi-domestic marketing concept is one of the main concepts adopted by major multinational corporations such as McDonalds.

Multi domestic strategy is a strategy by which companies try to achieve maximum local responsiveness by customizing both their product offering and marketing strategy to match different national conditions. Production, marketing and R&D activities tend to be established in each major national market where business is done (Ghazali, & Saleh, 2012). McDonalds is an industry leader in adopting a specific multi-domestic strategy. It alters its menu by alternate product offerings and also carries out different restaurant practices to satisfy the needs of the specific national market in which they are operating (Magopet, Sanders & Koti, 2013).

The purpose of this report is to evaluate the challenges faced by marketers in promoting the products and services to the target audiences under the Multi-Domestic Market Concept. This report mainly will talk about the multi-domestic strategies adopted by the McDonalds in order to sell its burgers in India and China. In this report the introduction about McDonalds and the burgers which they sell in these two countries will be given. Also, the profile of these two countries, comparison of the marketing mix strategies and evaluation of these strategies will be given.

2.1 McDonalds’ Overview

McDonald's Corporation is the world's largest chain of fast food restaurants, serving nearly 69 million customers daily through more than 34,000 restaurants in 119 countries including India and China. The business began in 1940, with a restaurant opened by brothers Dick and Mac McDonald in San Bernardino, California. The present corporation dates its founding to the opening of a franchised restaurant by Ray Kroc, in Des Plaines, Illinois on April 15, 1955. Each McDonald's restaurant is operated by a franchisee, an affiliate, or the corporation itself. The corporations' revenue comes from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. In the year end 2010, 80% of McDonald’s Restaurants were franchised worldwide in which 59% conventional franchises, 21% licensed to foreign affiliates and 20% company owned (Magopet, Sanders & Koti, 2013).

The vision is to be the leading fast food provider around the globe. McDonald's brand mission is “to be our customers’ favorite place and way to eat. Our worldwide operations are aligned around a global strategy called the Plan to Win, which center on an exceptional customer experience – People, Products, Place, Price and Promotion.” Its value is enhancing customer experience, summarized in “Q. S. C. & V.” Q refers provide good QUALITY, S refers SERVICES to customer, C refers have a CLEAN environment when customer enjoys their meal and V refers the VALUE of products (Magopet, Sanders & Koti, 2013).

2.2 Burgers in India and China

China

In China, Chicken McNuggets can come with the barbecue, sweet and sour, honey and hot mustard, or chili garlic sauce. Chinese menus also include crispy Buffalo chicken wings, called McWings. All chicken burgers offered in Chinese McDonald's use thigh fillet (e.g., Premium Grilled Thigh Fillet Burger, Hot and Spicy Grilled Thigh Fillet Burger), rather than breast meat, which is preferred in occidental countries (Cui, & Ting, 2009).

The Big 'n' Tasty is sold as the Big 'n' Beefy in the Chinese market, and is topped with cheese, cucumber, and mildly spicy Thousand Island dressing. Pies come in two standard flavors: pineapple and taro, although special flavors including chocolate, banana, and azuki bean have also been offered on a limited basis. There is a seasonal Chinese New Year meal available, including the Grilled Chicken Burger and curly fries, with a horoscope of the twelve zodiac animals of Chinese astrology and traditional red packet (lai see) (Cui, & Ting, 2009).

The Black Burger features a bun fashioned from black squid ink with white sesame seeds, two beef patties, mashed potatoes, lettuce, bacon and truffle sauce – likely to be made from truffle oil, a synthetic product. The White Burger is more or less the same, consisting of a white bun topped with sesame seeds with a crispy chicken patty, mashed potatoes, lettuce, bacon and pepper mushroom sauce. While not as adventurous, it complements the Black Burger nicely (Cui, & Ting, 2009).

India

Apart from selling the regular international McDonald's products such as McChicken, Chicken McNuggets, Chicken McGrill and Filet-O-Fish, McDonald's has developed a wide variety of vegetarian products exclusively for the Indian market, as a large number of Indians are vegetarians. Some of these products are the McAloo Tikki Burger (a burger with an aloo tikki-inspired patty made out of potatoes, peas, and spices), the McVeggie burger (the vegetarian equivalent of the McChicken), the McSpicy Paneer burger (a burger with a fried paneer patty breaded with Mexican and Cajun spices) and the McSpicy Paneer Wrap (a Mexican wrap equivalent of the McSpicy Paneer burger). In 2012, McDonald's India introduced the McEgg burger exclusively for the Indian market, keeping in mind the large eggitarian population in the country. The McEgg burger comprises a poached egg between two steamed buns and is extremely popular among college students. A year later, it introduced Masala Grill burgers, an indigenous version of the burger which consists of either a potato-soya or chicken patty, grilled and seasoned with garam masala and dressed with roasted chili sauce and onions (Yeua et al., 2012).

McDonald's has also developed variations of its international non-vegetarian products exclusively for the Indian market. The Big Mac burger is sold as the Chicken Maharaja Mac, where instead of beef patties, chicken patties are used. A spicy version of the McChicken, the McSpicy Chicken burger and its Mexican wrap equivalent, the McSpicy Chicken Wrap are also sold. It is to be noted that the McSpicy Chicken burger is the Indian equivalent of the actual McChicken burger in the USA, albeit served on a sesame bun, while the Indian McChicken burger is served on a sesame bun and is not spicy (Yeua et al., 2012).

3.0 PESTEL Analysis

3.1 China

Political Factors

China has a Socialist system in their political system and the government has full control all the activities. The only political party in China is Chinese Communist Party (CCP) and other eight nominally independent small parties are controlled by the CCP. There are no large political opposition groups in China. The government is moderate and stable. They have effective and non-transparent, complex and inconsistent policies, laws and regulations in the country (Valkjärvi & You, 2012).

Economic Factors

During the Asian Financial Crisis, China suffered relatively few harmful effects and almost all the other Asian currencies were devalued except Yuan. They have provided $4.5 billion to the IMF to overcome the crisis economies. China is a member of World Trade Organization (WTO) and has business freedom in the country. The economy is open and tight, some restrictions are on foreign investments (Valkjärvi & You, 2012). They have loosened trade policy in export and import. They have moderate corporate tax rate and high income tax rate in the country. The government encourages the multinational corporations and foreign direct investments. They have moderate inflation rate. They also have mixture of free market and controlled market systems. The Chinese economy is affected by challenges from the European economic crisis that could badly affect its growth rate, regional disparity, and growing environmental concerns (RAWLANI, 2011).

Cultural and Social Factors

China is the world‘s most crowded country and the estimated population in July 2012 was 1,343,239,923 people. Today, the country has one child policy for each family in order to improve the education system. China has large gap between the poor and the rich people (Valkjärvi & You, 2012). The Chinese population consists of 56 ethnic groups and the Han ethnic group is the largest. There are many unmarried children in their 20‘s and 30‘s are still living with their parents. The literacy rate in 2010 was 92.8%. The religions in China are Buddhism (50%), Taoism (30%), and Chinese folk religions & others (Muslim 1.5-2%, Christian 3-4%). The official language of China is Putonghua (Mandarin). The population of China is so great that Mandarin is spoken by over fourteen percent of the people in the world (RAWLANI, 2011).

Technological Factors

Recently, China has a rapid development in science and technology (Valkjärvi & You, 2012). In 2011 there were 500 million internet users and in 2010 there were 15.251 million internet hosts. China Telecom alone serves 55 million broadband subscribers and Tianhe-1A is the world’s fastest supercomputer. China has deployed pebble bed nuclear reactors which is cooler and safer than conventional nuclear reactors. In 2011, China developed a prototype train capable of reaching speeds of 310 mph which was the first ultra-high-speed train developed. In September 2011, the first Chinese space station module, Tiangong-1, was successfully launched. Meantime, they made the first attempt at the robotic exploration in Mars. China conducted a successful test of an anti-satellite missile (RAWLANI, 2011).

Geography and Environmental Factors

China has a variety of forest types. Hardwoods such as teak and mahogany are cultivated as commercial crops. Bamboo is a very fast growing plant which can grow up to one meter a day. An important tree found in China is the ginkgo tree which is used in Chinese medicine. It is one of the world's earliest surviving plant species. China has a wide variety of wildlife such as tigers, snow leopards, monkeys, yaks and giant pandas. The birdlife includes peacocks, parrots, cranes and storks. Cormorants are used by some fishermen on the rivers to catch fish for them. China's natural environment has been adversely affected by deforestation for many years. China has different regulations and laws in preventing pollution in the country. There is now a program of tree planting (RAWLANI, 2011).

Demography

The population is over 1.3 billion people. The age structure is 0-14 of 21%, 15-64 of 71%, and 65+ of 8%. The population growth rate is 0.6%. The birth rate is 13% and death rate is 7%. The sex ratio is under 15 years 118 male and 100 female. The infant mortality rate is male 21% and female is 26%. The life expectancy at birth is male 71 years and female 75 years. The total fertility rate 1.7 children born/woman. China is the most populated country in the world and its national population density (137/km²) (RAWLANI, 2011).

Legal Factors

The civil law is influenced by Soviet and continental European civil law systems. Meantime, the legislature retains power to interpret statutes (Valkjärvi & You, 2012). The criminal procedure law was revised in early 2012. The labour regulations in China affect overall employment and productivity growth in the country. The non-salary cost of employment is high. Also, China has not submitted an International Court of Justice (ICJ) jurisdiction declaration (RAWLANI, 2011).

3.2 India

Political landscape

The current government, the Indian National Congress-led United Progressive Alliance, was expected to set the pace of reforms, as it is in its second term; however, this development is yet to take its assumed form. In 2010, India’s corruption issues came to the fore due to irregularities concerning the Commonwealth Games and the 2G spectrum awards, which led to high level investigations and arrests. These allegations and scams have tarnished the image of the government, and have led to nationwide protests (Datamonitor, 2011).

Economic landscape

The economy is expected to grow by 7.9% in 2011, against a backdrop of rising inflation and the revival of the global economic slowdown. The fiscal deficit in 2010 – 11 stood at 4.7% of GDP, much lower than the estimated 5.09% and a significant improvement over the 13 year high of 6.4% in 2009 – 2010. The finance ministry has set a target of 4.6% for 2011 – 2012 (Datamonitor, 2011).

Cultural and Social landscape

Despite the focus on sustained improvement in the quality of life of the population in general (and the poor in particular), India’s progress on the social front remains slow, especially in areas concerning public health and education. Cultural history dates back at least 5000 years so it is one of the oldest civilizations around today. More than 80% of Indians are Hindu, but only represents a little more than 50% of workforce in India. 30% of Indians speak Hindi which is the official language, recognition of at least 17 other languages. English is used in many professional settings. When doing business in India it is important to take into account that there is over 20 different sub-cultures that separate Indians as a whole, which means that different regions of India operate differently and have different norms, but the biggest geo-political separator is the north and south (Datamonitor, 2011).

Technological landscape

India’s competitiveness in the IT sector has been well-maintained. As per India Brand Equity Foundation, the industry is poised to be worth $225bn by 2020.The prevailing education system of India has not been able to match the needs of industry. Most science and engineering graduates require further training before they can begin work. The 11th five year plan prioritizes R&D by increasing opportunities in science and expanding R&D in universities (Datamonitor, 2011).

Legal landscape

The expansion of the tax base has improved the availability of resources for the central government and individual states. The lack of a single regulator for the financial sector has resulted in limited growth in this area, as inter-linkages have not been fully exploited (Datamonitor, 2011).

Geography and Environmental landscape

India is a poor performer on the Environmental Performance Index (EPI). In an EPI study carried out in 2010, India was ranked 123rd out of 163 countries. India’s dependence on (mainly coal-based) thermal energy has resulted in a host of environmental problems and increased India’s share of greenhouse gas emissions (Datamonitor, 2011).

Demography

India’s population surpassed 1 billion in 2001; 67% live in rural areas and 33% in urban areas. As per the latest estimate of 2006 the population density per square kilometer is 338 in India. However, density of population is very unevenly distributed. It can be observed that nearly 43 percent of the total population depends upon the rest 57 percent of the working population. The dependency ratio is also declining. That is in 2006 nearly 40% of our population depends on the rest 60%. The overall literacy level in India is 65%. The growth rate of the labour force is faster than that of the population. While the population is expected to grow by 1.4% per annum during the eleventh plan period the labour force is expected to grow by 2%. The Teacher Pupil ratio in Indian primary schools is 1:41, while in China it is 1:21. Female labour force participation rate has increased marginally from 42% in 19go to 45% in 2005. According to UNESCO 13.5 million Indian children are not enrolled in schools. There are also most 40 million slums in India (Datamonitor, 2011).

4.0 Comparison of marketing mix strategies

4.1 China

Product and Position

The first McDonald’s restaurant was located in the bustling east gate in Shenzhen SEZ in China on October 8th, 1990. And in April 1992, McDonald's opened a restaurant on Beijing’s Wangfujing Street, which became the world’s largest McDonald’s restaurant. The menu of McDonald’s Hamburger in China includes Big Mac, Filet-O-Fish, Spicy Chicken Filet Burger, Cheeseburger, Double Cheeseburger, Egg Beef Burger, and Quarter Pounder Cucumber Vegetable (Cui, & Ting, 2009).

They think that the customers come to McDonald’s are going to enjoy the Western-style fast food, so they do not want to change their core product, such like the Big Mac, Fries, Coco-Cola, Milk Shake and so on. But they added some kinds of adaptable products into their menu to adapt to the Chinese market. They have a dedicated study group of new food research in Hong Kong. Because of the demand of customer, they changed their local menu in China. For instance, the Spicy Chicken Sandwich which is mixed some Chinese characteristics that to put spicy chicken into sandwich can be found in this market. McDonalds had begun to ordering suitable menu for Chinese market, such like the breakfast product. The products like scrambled eggs, pancakes and hot tea which have typical Chinese elements can be found in McDonalds’ breakfast menu in China. The good market response proved that their strategy of product localization is correct (Cui, & Ting, 2009).

McDonald has more than 670 restaurants in China, and they are located in 25 provinces, 108 sub-administrative areas. McDonald takes the “family” as the main target group, including three groups. They are children, their parents and young people. Till now, McDonald’s has successfully set up a brand as “family” fast-food in China. They focus on selling the products to children, and then considering the parents and young people. They are keeping to bringing out new product which is affected by local test every year in the Chinese market (Cui, & Ting, 2009).

Price

McDonalds is planning to open 500 more stores in China in the next few years, and they will cut prices for many popular items on their Chinese menu. Even though the products are more expensive than local fast food in China, popular options like the Filet-O-Fish, Double Cheeseburger, McNuggets, McPuff, and the Mala Pork Burger, are all getting a significant discount. Considering about the customer’s consumption level, McDonald’s tend to use low-price strategy in this market. The same product would get different prices from Chinese and American markets. Thus, it is not unusual to find that a Big Mac is much cheaper in Beijing than in Boston (Cui, & Ting, 2009).

In the end of 2008, the global financial crisis began to take place. Chinese economic drag down the pace of expansion and its growth fell to 6.8 per cent in the spring of 2009. Responding to this social phenomenon and in order to attract customers and lift the lackluster sales, McDonald's cut down about 40 per cent of its products’ prices in the beginning of 2009. It seems like at the same level as 10 years ago. Popular items that were offered at reduced prices include Filet-O-Fish, McNuggets, McPuff and the new Mala Pork Burger (Cui, & Ting, 2009).

Under the current economic situation, consumers are seeking for cheap but valuable products and services. McDonald has decided to reduce the price of product in China. In the February 2009, McDonald’s brought out 4 kinds of Daily Extra Value Meal which only costs 16.5 CNY (equal to 1.6 EURO at that time). From April the 1st, McDonald’s nationwide brought out some really cheap product cost only 9 CNY, such as the Spicy Chicken Filet Burger and Spicy McWings (Cui, & Ting, 2009).

Place

McDonald’s restaurants are built near the large-scale commercial facilities in Beijing. When choosing a place to open new restaurant, McDonald’s tends to set up the stores which are near the large-scale business establishments, and chooses the area which can easily be adapted to the American fast-food. Obviously it is one of the factors that lead every branch into success. Usually they do not suggest spending too much money in developing new markets, but find the markets which are suitable to develop to McDonald’s. They do not think that all the places have their own development space, so they just try to choose the right place. Before decisions are made, they often do the market research and collect the information as much as possible, including the amount of population, economic level, buying ability and the potential development scale, and income levels, development of shopping opportunities and so on (Cui, & Ting, 2009).

In order to attract more customers, they deliver coupons. Customers can download the coupons from McDonald’s website. They also use other ways to extend the coupons. When developing the business in China, they choose to cooperate with Cool-Peng Network. Users from all over the country can log in to the Cool-Peng Network and where they can download and print the McDonald’s electronic coupons by themselves. Cool-Peng Network is the largest national electronic coupon portal in China and it puts out many kinds of electronic coupons and covers several industries. In addition, this network has a high click rate and it knows a lot about the customers’ habits and behaviors of the Chinese market. Hence, with the help of Cool-Peng Network’s wide influence and huge market, McDonald's easily delivery the e-coupons to the consumers in the Chinese market (Cui, & Ting, 2009).

Promotion

McDonald's uses different advertisements in different countries. This is affected by the characteristics of different regions, cultures, customs, and customer behaviors. Their advertisements in Chinese market always contain a warm picture. It sometimes looks like the elderly and the young generation within a happy and relaxing atmosphere with easy-listening background music. Fancy red and eye-catching golden are the main colors of their logo. Moreover, they keep on using some symbolic cartoon characters and free toys to attract the youth (Cui, & Ting, 2009).

McDonald’s tends to establish a good relationship with the consumers. Thus, the advertisements are always emphasizing the traditional customs and values which are cherished and followed by Chinese people, such as the celebration of Chinese New Year, New Year wishes, calligraphy and so on. Before making advertisements, they always learn about Chinese culture and do some research on market situation first. For instance, in China, the McDonald’s restaurants are ideal places for young lovers and couples to go. It is clear that McDonald's advertising should depict romantic atmosphere. In addition, McDonald’s restaurants also put some special double seats for lovers and couples (Cui, & Ting, 2009).

"24 hours" Services and Take Away

In Guangzhou, Shanghai, Shenzhen, Nanjing and other cities in China, to meet the needs of different customers, a great number of McDonald's restaurants are open 24-hours a day. They have 872 24-hours services restaurants in China. During the 24-hours operating hours, the restaurants supply all kinds of McDonald's products. However, not all of the McDonald’s “Drive-Thru” restaurants open 24-hours a day. McDonald’s keeps on extending services called “Mailesong” in China. It supplies 24-hour services for take-away, but this kind of service is only supplied in Guangzhou, Shanghai, Shenzhen, Beijing and some big cities, because the economic development level are totally different between different regions in China. In the more developed cities, the demands of 24-hour services from customers are greater than in others (Cui, & Ting, 2009).

4.2 India

Product

McDonalds has purposely kept its product depth and product width limited. McDonalds had first studied the behavior of the Indian customer and provided a totally different menu as compared to its menu offered in International market. It removed pork, beef and mutton burgers from the menu. India is the only country where McDonalds serve vegetarian menu. Even the sauces and cheese used in India are 100% vegetarian. McDonalds continuously innovates its products according to the changing preferences and tastes of customers. The recent example is the introduction of the Chicken Maharaja Mac and latest introduction of chicken style is Chicken Mcnuggets. McDonalds brings best product of quality and of best features as per the preference and demand of the target market (Yeua et al., 2012).

Place

There are certain degree of fun and happiness that McDonalds provides to its customers. It provides value position based on the needs of the customer. McDonalds offers proper hygienic atmosphere, good abidance and better services. Now McDonalds have also started offering internet facilities at their outlets, along with music system through radio, not the normal music but the music which is preferred by young generation in order to attract them. There are also games for children the one example is air hockey. Children play games till the time there parents spend quality time in McDonalds (Yeua et al., 2012).

Price

McDonald’s came up with a very grasping punch line “Aap ke zamane mein, baap ke zamane ke daam”. This pricing strategy was founded to attract middle class and lower class people and the effect can clearly be seen in the consumer base that McDonalds has now. McDonalds has certain value pricing and bundling strategies such as happy meal, combo meal, family meal, happy price menu etc to increase overall sales of the product (Yeua et al., 2012).

Promotion

The promotional activities adopted by the McDonald helps to communicate efficiently with the target customers. The diagram gives idea about the promotion strategy of McDonalds. Application of above mentioned Communication Mix describes the cost that is feasible as per the consumers. Some of the most famous marketing campaigns of McDonald’s are: “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” and “I’m loving it” (Yeua et al., 2012).

McDonald’s corporate used advertising, personal selling, sales promotion, public relations, and direct marketing and became world’s largest leading Burger Empire. These five promotion tools are used by McDonalds to integrate marketing communication program which allows McDonalds to access the communication channels clearly, consistently and easily transfers messages and product to the target audiences (Yeua et al., 2012).

There are three main objectives of advertising for McDonald’s are to make people aware of an item, feel positive about it and remember it. The right message has to be communicated to the right people through the right media. McDonald’s does its promotion through television, hoardings and bus shelters. They use print ads and the television programmes are also an important marketing medium for promotion (Yeua et al., 2012).

In personal selling McDonalds employees working in different outlets are the best example of personal interaction, the employees are directly serving the customers so, and the face to face communication is easily possible. In the McDonalds outlet there are such staff which are appointed for personal selling they are the one who perform the activities regarding selling up of goods to customers. McDonalds organizes several sales promoting contest and programmes in different retail markets and outlets in which they distributes free discounts coupons. The statue of Mascot McDonalds is always there for any occasions that are also one of the logo of McDonalds (Yeua et al., 2012).

The restaurant employees play a huge role in interacting with the public. On a day-to-day basis the employees commit themselves to customers and the customers’ feelings toward the brand. McDonald’s feels that before they communicate with their customers they need to be aware of what their competitors are communicating, so they can create a beneficial difference between themselves and the competitors. The McDonalds uses tool in the home delivery services in which they directly serve the order to their home. Also they have a websites which are more in preference for direct marketing in that they usually mentioned all the new offers along with the contact number of your nearby outlets (Yeua et al., 2012).

(Yeua et al., 2012).

5.0 Evaluation of strategies

5.1 China

The Chinese market was also challenging for McDonald’s in terms of real estate. McDonald’s US site selection was calculated down to a science and emphasized the suburbs because that is where most American families spend their time. Generally speaking, China’s inner cities were less deteriorated than US inner cities, and McDonald’s found them to be their primary target markets. They also decided that the best way to expand was to build groups of stores simultaneously, thereby achieving economies of scale in construction, sourcing, training and distribution. They also secured locations in growing areas that would become prime real estate in the future. Similar to their experience in Russia, they were taking a risk to buy low and have that presence when property prices start to appreciate (DeMarie, Manhart, & Shrader, 2010).

Contrary to Russia, China was experiencing tremendous economic growth and consequently more and more Chinese were driving cars. New drivers seemed to enjoy driving everywhere possible. McDonald’s was the first fast food provider to offer a drive up lane in China, and the concept proved very popular. Trying to further take advantage of the growing car ownership in China, McDonald’s closed a deal with the Chinese state owned oil company allowing the company to open stores at their gas stations (DeMarie, Manhart, & Shrader, 2010).

The Chinese tended to not dine out nearly as often as Americans. In China, McDonald’s was expensive to the average citizen. In China, McDonald’s pricing was tiered by district relating to the affluence of the consumer. Maintaining affordability was crucial to succeeding. When they do dine out, they are typically not looking for their traditional cuisine, but something more novel. Going to McDonald’s was an opportunity to experience the outside world that China was only recently open towards. It symbolized their reformation, a modern society with private industry and a growing economy separate from the state. The American experience offered by McDonald’s was a popular dining choice; therefore the traditional Western style menu was still the basis of McDonald’s Chinese menu. The Chinese menu did have some unique selections. In the Chinese culture, beef was associated with strength and energy, so China was home to the Mega Mac with four beef patties. The new quarter pounder in China had cucumbers instead of pickles. There were some more traditional Chinese choices on the menu that were inexpensive such as a corn cup, a pork sandwich, and seafood and vegetable soups (DeMarie, Manhart, & Shrader, 2010).

During traditional festivals people tended to gravitate toward conventional Chinese restaurants. McDonald’s hoped to reverse this tendency by celebrating Chinese national holidays as well. They decorated stores with cultural emblems of Fu (happiness), magpies, and twin fishes symbols, to recognize and show respect Chinese traditions and culture (DeMarie, Manhart, & Shrader, 2010).

A big issue in China was food safety. McDonald’s relied heavily on suppliers to minimize service time in the store, but safe food handling practices were not common. They held Chinese suppliers to the same high standards as US suppliers and frequently dropped in unannounced for inspections. McDonald’s worked hard to establish local supply chain networks in order to be less vulnerable to restrictive governmental trade policies (DeMarie, Manhart, & Shrader, 2010).

They added some kinds of adaptable products into their menu to adapt to the Chinese market. Considering about the customer’s consumption level, they tend to use low-price strategy in this market. They tend to set up the stores which are near the large-scale business establishments, and choose the area which can easily be adapted to the American fast-food. In order to adapt different regions, cultures, customs, and customer behaviors their advertisements in Chinese market always contain a warm picture. Also, in order to meet the needs of different customers, a great number of McDonald's restaurants are open 24-hours a day (Cui, & Ting, 2009).

The strategies used in China helped them to satisfy customer needs and wants by providing products at reasonable price. They were able to adapt to the cultures in China. As a result of this they have a large market share in this country.

5.2 India

Initially McDonald’s experienced difficulty in India due to environmentalists and animal welfare activists. Religious and anti-western sentiment also presented challenges to the company. Over forty percent of the Indian population was vegetarian. Out of respect for the local religion and culture, McDonald’s served no beef or pork products in India. Instead, McDonald’s developed a special line of vegetable, fish, and chicken sandwiches. The company developed both vegetarian and non-vegetarian menus with separate kitchens and service crews. McDonald’s also offered kitchen and restaurant tours to assure customers the staffs were separate (DeMarie, Manhart, & Shrader, 2010).

Seventy-five per cent of the McDonald’s menu was localized for India. This represented a much larger portion of the total menu than for other Asian countries. The Chicken Maharaja Mac, two grilled chicken patties with smoke-flavored mayonnaise, cheddar cheese and vegetables, became one of the most successful choices on the localized menu. The popularity of the chicken nuggets and sandwiches caused some restaurants to run out of supplies. The high demand for this sandwich led the company to also offer it in a lamb version (DeMarie, Manhart, & Shrader, 2010).

McDonald’s continued to reach out to local communities to improve its image. It engaged in partnerships with Indian communities to support schools, gardens and parks. The company also made donations to the Bhuj, Gujarat, and Latur earthquake relief efforts (DeMarie, Manhart, & Shrader, 2010).

McDonalds continuously innovates its products according to the changing preferences and tastes of its customers. McDonalds started offering internet facilities, games for children at their outlets, with music preferred by young generation in order to attract them. McDonald’s came up with a tagline “Aap ke zamane mein, baap ke zamane ke daam”. This pricing strategy was to attract middle class and lower class people (Yeua et al., 2012).

The promotion tools used by McDonalds are to integrate marketing communication program which allows them to access the communication channels clearly, consistently and easily transfers messages and product to the target audiences. The restaurant employees play a huge role in interacting with the public (Yeua et al., 2012).

The affordable prices and value-ladder strategy are used to ensure affordability which increases their customer base. Indians are very price sensitive therefore these strategies used help to increase customer satisfaction. McDonald’s understand that it is very important to build up their brand and reputation so as to strengthen brand name and generate positive political capital (support from government for expansion strategy). Therefore, they started a series of corporate social responsible (CRS) activities. The multi-domestic strategy usually does not allow the development of economies of scale and thus more costly, however McDonald’s managed to overcome this issue through its efficient supply chain management and used of local suppliers. Indian has relative high import tax and foreign exchange fluctuations. To reduce the costs, they used the raw materials from local suppliers (Yeua et al., 2012).

The strategies used in India helped them to satisfy customer needs and wants by providing products at reasonable price. They were able to adapt to the cultures in India. As a result of this they have a large market share in this country.

6.0 Conclusion

McDonalds is an industry leader in adopting a specific multi-domestic strategy. It alters its menu by alternate product offerings. It customizes and sells various types of burgers in India and China. Each McDonald's restaurant is operated by a franchisee. In China they sell Grilled Thigh Fillet Burger, Hot and Spicy Grilled Thigh Fillet Burger, Big 'n' Beefy, Black Burger and White Burger. In India they sell McAloo Tikki Burger, McSpicy Paneer burger, McSpicy Paneer Wrap, McEgg burger, Chicken Maharaja Mac and McSpicy Chicken burger.

The PESTEL analysis of China shows that China’s government is moderate and stable. They have effective laws. It is a fast growing economy. The government encourages the multinational corporations and foreign direct investments. The Chinese population consists of different ethnic groups and religions. The official language of China is Putonghua. It has a rapid development in science and technology. It has a variety of forest types. It is the most populated country in the world. China's natural environment has been adversely affected by deforestation for many years. The labour regulations in China affect overall employment and productivity growth in the country. The PESTEL analysis of India shows that it is a stable and moderate government. Its economy is growing rapidly. It has many different ethnic groups and religions. India has strong IT sector and most science and engineering graduates require further training. The tax base has improved the availability of resources for the central government and individual states. India is a poor performer on the Environmental Performance Index. It is the second most populated country in the world.

The marketing mix strategies of China are different compared to India. In China, it uses beef, pork, fish and chicken. The taste is less salty, less fried and less spicy. The product division is depending on different provinces. Price setup is quite higher compare with normal fast food restaurants. It lightly adjusts the price in difficult time and there is no price segmentation. They allocate the outlet with built in the bustling commercial area. They use internet to target new and younger generation. They utilize the network facilities and create various function activities to attract younger customer participation. On the other hand in India, they use chicken but neither beef nor pork. The taste is spicy and the product is division into vegetarian and non-vegetarian. They have different pricing strategy to the different market segment. Prime value product serve for middle class and economy value product focus to lower class of the customers. The outlets are very evenly spread throughout the cities and high accessibilities location. They target children and kids. They make awareness of the item, create positive felling, and try to remain the positive image in people mind.

In China, they have used the marketing mix strategies to science and understand the suburbs. They wanted to expand, target the market, and offer a drive up lane in China. They wanted to affluence the customers and to succeed the customers. They wanted to recognize and show respect Chinese traditions and culture. They wanted to minimize service time in the store, to establish local supply chain, and to be less vulnerable to restrictive governmental trade policies. They also wanted to adapt to the American fast-food by considering customers consumption. In India, they wanted to assure customers the staffs were separate, localizing the menu and to improve its image by supporting schools, gardens and parks. They wanted to change preferences and tastes of its customers, to attract middle class and lower class people, and to integrate marketing communication program. They also wanted to ensure affordability of the customers, to build up their brand and reputation and to reduce costs.

In a nutshell, the evaluation of strategies in these two countries shows that the McDonald is trying to adapt its marketing and business activities as much as possible to these counties.

7.0 References

Cui, Y. & Ting, Z. (2009). American Fast Food in Chinese Market: A Cross-Cultural Perspective ----The Case of KFC and McDonald’s (Master’s Dissertation). University of Halmstad, Halmstad, Sweden. Retrieved October 05, 2013, from http://www.google.mv/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CCoQFjAA&url=http%3A%2F%2Fhh.diva-portal.org%2Fsmash%2Fget%2Fdiva2%3A286121%2FFULLTEXT01.pdf&ei=1fVUUrW0KqaRige6toDoDg&usg=AFQjCNFDdMyIvJXuAZVyNVqaGeuT5dqmVw&bvm=bv.53760139,d.aGc

Datamonitor. (2011). Country analysis report: India. Retrieved October 05, 2013, from http://www.scribd.com/doc/81444391/India-PESTEL-Analysis

DeMarie, S. M., Manhart, P. & Shrader, C. B. (2010). McDonald’s: From Big Mac to P’tit laisir. Iowa State University College of Business, Iowa, USA. Retrieved October 07, 2013, from https://www.google.mv/webhp?hl=en&tab=ww#hl=en&psj=1&q=ISU+-+McDonalds+Case

Dr. Ghazali, M & Dr. Saleh, R. (2012). International marketing. Malaysia: Meteor Doc. Sdn. Bhd.

Magopet, A., Sanders, K. A., & Koti, A. (2013). McDonald’s Corporation [PowerPoint slides]. Retrieved October 04, 2013, from http://www.google.mv/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CCgQFjAA&url=http%3A%2F%2Fwww.neiu.edu%2F~amagopet%2FMcDonald%2560s%2520Case-%2520Strategic%2520Management%2520%28by%2520Adrian%2520Magopet%29.pptx&ei=PL1TUuasF42kiQfK4ICQDQ&usg=AFQjCNFx7xEHdgi-5XmTYEU9sWmF0YjFNw

RAWLANI, D. (2011). PESTLE ANALYSIS OF CHINA (Power point presentation). Retrieved October 08, 2012, from http://www.slideshare.net/iamankitsharma/china-pestl-analysis

Valkjärvi, M., & You, W. (2012). PESTEL Analysis of China. Retrieved October 08, 2012, from https://publications.theseus.fi/bitstream/handle/10024/43336/Valkjarvi_Mira.pdf?sequence=1

Yeua, C. S., Leonga, K. C., Tonga, L. C., Hanga, S., Tang Y., Bashawirb, A., & Subhanc, M. (2012). A Comparative Study on International Marketing Mix in China and India: The Case of McDonald’s. SciVerse ScienceDirect, 65 (2012) 1054 – 1059.

Adam Khaleel

Monday, December 21, 2015

Module Name: International Marketing

1.0 Executive Summary