Individual Assignment
Pricing Strategy for McDonald’s
By
Kapil Wadhwa (Roll No- EPGP013)
Professor: Prof. Vinay Singh Chawan
Pricing and Revenue Management
Table of Contents
1.1 About McDonald’s........................................................................................................................3
1.2 McDonald’s positioning in India..................................................................................................3
1.3 McDonalds Pricing Strategy.......................................................................................................4
1.4 McDonalds Vs Competition.........................................................................................................5
1.6 Conclusion.....................................................................................................................................7
1.1 About McDonald’s
McDonald’s roots go back to the early 1940s when two brothers opened a burger restaurant
that relied on standardized preparation to maintain quality—the Speedy Service System. So
impressed was Ray Kroc with the brothers’ approach that he became their national franchise
agent, relying on the company’s proven operating system to maintain quality and
consistency.
McDonald entry in India dates back to 1993 where in it incorporated its wholly owned
Subsidiary – MacDonald’s India Private Ltd. In October 1996, it first opened its first Fast food
Center in Vasant Vihar, New Delhi. Later it entered into 50:50 Joint Ventures with Connaught
Plaza Restaurants owners who were Vikram Bakshi of North & Hardcastle Restaurants and
Amit Jatia of West. Before the launch the Indian Management team was trained extensively
in McDonald’s Indonesia and US.
1.2 McDonald’s positioning in India
1.2.1 Product Adaption for India
McDonald’s has the policy of adopting the product adaption to local taste of the country.
While it moved to other countries of South East Asia it introduced products like Burgers with
Thai Basil in Thailand, Teriyaki Burgers in Japan and Rice Dishes in Indonesia. For India as
well company adopted the similar strategy where in it came out with various products
customised to the local flavours. Moreover adaptation was required at higher level as
different regions in India have different taste for food. Moreover McDonald’s had to introduce
a complete vegetarian section as 40% of the population was vegetarian. Working on these
lines, McDonald made amendments to it current product line to suit Indian conditions like
Maharaja Mac replaced Big Mac (used in US) and Chicken Patty was used instead of Beef.
1.2.2 McDonald as Family Restaurant
McDonald’s success in India can be owed to its positioning as family Restaurant. In order to
position itself effectively McDonald has stringent cleaning standards and keeps its trays
sanitised several times a hour. Further meticulous attention to cleaning is paid beyond lobby,
kitchen to the pavement & area outside.
To give it a home like look, McDonalds came out with high chair concepts and the whole
ambience is designed to give bright, casual, comfortable and contemporary look. Special
attention is given to children and there various gift vouchers and meals designed for the kids.
1.3 McDonalds Pricing Strategy
1.3.1 Value Pricing
McDonald’s came with the concept of value pricing for Indian consumers where in it came
out with various combos in form of
Happy Meals comprising of small burgers, fries, coke + toy.
Medium meal combo that consisted of burger, fries and Coke with the price of Rs 75
Maharaja Mac Meal – Rs 94
Family Dines under Rs 300
The prices for the meals were economical as compared to the offerings in Pakistan and
Srilanka and are 50% less than United States.
1.3.2 Product line Pricing
McDonalds has a unique price strategy which falls solely on many of their product lines.
Their Value Meals fall into the category of Product Line Pricing. “Where there is a range of
product or services the pricing reflect the benefits of parts of the range.” For example, you
can order a Two Cheeseburger Value meal that comes with a medium drink and fries for
around Rs 75 (prices may vary). You can Super Size this meal to get a large drink and large
fries for a little more money or you can go with another value meal that might include
different items for different price.
1.3.3 Promotional Pricing
If you have driven past a McDonald’s, you will notice that somewhere on their property,
whether it is a banner on their building or spelled out on their sign, they are always offering
some sort of promotional pricing. This promotion can be seen as a large banner draped
across the building on many restaurants. This promotion changes weekly and may consist of
different menu items packaged together.
1.3.4 Penetration Pricing
When McDonald’s first began to break into the coffee market, they ran a large marketing
campaign in order to gain some market share in the industry. For a limited time frame, you
could get a free small coffee every morning from 4-7am. This was to promote their new
coffee partnership with Green Mountain Coffee and helped spread the word that McDonald’s
was now offering coffee.
1.4 McDonalds Pricing Vs Competition
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1.5 Conclusion
Success of McDonald’s has been mainly due to its value for money offering to the Indian
Consumers. The prices offered are in the range of lower middle section of the society.
Moreover its customisation in accordance with the taste of Indian consumers has also
worked in its favour. The target segment of McDonalds has been Young Family who eats
out. Moreover it also places special focus on Children where in it believes that family follows
the children choice of eating joints. It has created a differentiation factor in India through
highlighting brand, food and variety. This has been a shift from worldwide positioning of
drive-in convenience and speedy service.
