Introduction
McDonald’s is the world's leading food service
retailer with more than 30,000 restaurants in 121 countries serving 47.2
million customers each day. The mission of McDonald’s is to be the best fast
service restaurant experience whereas its vision is to be the Best Employer in
Each Community around the World.
McDonalds have been
operating five restaurants in Sri Lanka, located in Kollupitiya, Rajagiriya,
Nugegoda, Welisara and kotahena and have plans to open restaurants in other
major cities in Sri Lanka in the near future.
Reasons
behind McDonalds’ enter to Sri Lanka market
Mc Donald’s
entry in India dates back to 1993 where in it incorporated its wholly owned
subsidiary – McDonalds’ India private Ltd. In October 1996, it first opened its
first Fast Food center in Vasant vhar, New Delhi. Later it entered into 50:50
joint ventures with Connaught plaza Restaurants owners.
With Mc Donald’s
established in India and a fast food culture emerging in Sri Lanka was the
logical for Mc Donald’s to enter the market as part of the Asia Pacific, Middle
East and South Asian market plan. Mc Donald’s saw that KFC and Pizza Hut were already
established in Sri Lanka and they not well established in the country. That is
there was not supply for emerging fast food culture in Sri Lanka.
Mc Donald’s saw
inflow of foreign investments
into the region, increasing household income, increasing consumption and
spending, because of cheaper labor compared to wages in Western Europe. There
was a general trend towards the improvement of the standard of living of
citizens of Asian Countries.
Business expansion into Srilanka offers potential
profit and minimization of cost on labor and raw materials. Expansion into Sri
Lanka offers mutual benefit to the country and to the foreign business by
providing investments and technology to the country and cost effective
operations and profit to foreign business firms.
Strategy
they used to enter
McDonalds expands its operations through franchising.
Franchising is a hybrid manner of expanding and organizing the business by
establishing a relationship of agency with the franchisees. Franchising
involves the convergence of a parent company and several small businesses. The
parent company sells to the smaller businesses the right to distribute its
products or use its trade name and processes. A contract governs the agency
relationship established between the parent company and the franchisees. The
franchise contract defines the conditions of the agency and the duration of the
relationship.
There
is little market segmentation because McDonalds target households in
general. Although at the beginning, there may be an initial segmentation with
the middle and upper income classes composing majority of its market .Organizational
culture is the concept that guides the operations of McDonalds. McDonalds operates
according to four values quality, service, convenience and value.
Mc Donald’s entered to Sri Lanka with Abans
Restaurant Systems Ltd, which signed a 20-year development franchise agreement
to manage and run the McDonald's chain in Sri Lanka in 1998. Total investment
for the first restaurant in Colombo is $3 million.
This franchise agreement gives them the right to
operate a specific McDonald's restaurant, at a single address, for a period of
20 years, which can be renewed. Under the franchise agreement, the company
agrees to provide the McDonald's trademarks, restaurant decor, signage and
equipment layout. In addition, the franchisee can use the recipes for the
firm's products, their stock control, accounts systems, method of operation,
and marketing
Why they not spending
much money for sales promotion?
McDonald’s in Sri Lanka can be owed to
its positioning as family Restaurant. We have saw in the past a McDonald’s
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. McDonald’s
currently don’t spend much money for sales promotion and they mainly aim to
attract customers differentiating their
menu. McDonald generally don’t provide same food product and change weekly.
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, we can order a Two Cheeseburger Value meal
that comes with a medium drink and fries for around Rs 75 (prices may
vary). We 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.
In order to position itself effectively
McDonald has stringent cleaning standards and keeps its trays sanitized several
times an hour. Further meticulous attention to cleaning is paid beyond lobby,
kitchen to the pavement & area outside. To give it a home like look, McDonalds provide high chair concepts and the
whole ambience is designed to give bright, casual, comfortable and contemporary
look. Special attention is given to children and their various gift vouchers and meals designed for
the kids.
Possible future
marketing potential
01)
Increase its
product line and to have more variety to choose from, to include more deserts
and more items.
The
marketing and product R&D will need to work on offering more varieties to
entice existing and new customer base. For example, besides “fast food”, the
business can be expanded to offer “fast beverages” such as coffee varieties,
milk tea series. Currently McDonald’s have industrial,Formica restaurant
settings. One of the strategies that McDonald’s can venture into is expanding
its restaurant varieties to capture different market segments such as business
executives, internet café surfer. Such recent business innovative is Mc Café.
02)
To provide better
and quick service.
Today, in this fast moving dynamic world the demand
for goods and services are increasing at an alarming rate due to which there is
greater competency and competitors ruling in the market. Therefore, most of the
companies adopt different types of marketing strategies in order to serve their
customers in a more better and efficient manner than their competitors so that,
their business can easily survive in the market.
03)
To introduce
healthy food and educate about healthy lifestyle.
They
have to understand the new consumer trends and food patterns and go with the
customer satisfaction and keep their loyalty. And since the health issue became
more important to consumer in the current market, and then McDonald's have to
take these new concerns of customers into consideration and begin to plan for a
whole new line of healthy food that can compete with other rivals who had
already introduced it
Ex. McDonald’s
can introduce healthy food such as low calorie combo choice, putting more
effort in the R&D on introducing healthy food and eating habit. McDonald’s
can expand its product offering into organic food.
04)
Special
promotions during festivals as Sri Lankans tend to spend more at such events.
McDonald's
biggest challenge is going to be changing consumer perceptions about the
quality of the food and service offered in McDonald's food chain restaurants,
and that can be implement through launching a campaign focusing on the improved
quality, service and cleanliness to address complaints about some bad service.
05)
Try to sponsor
college festivals and Work for social welfare of the society.
06)
Lower the supply
chain cost so that it helps in cost reducing.
McDonald’s
success story in term of international marketing strategy planning context at
the domestic market
McDonald’s
success in Sri Lanka is based on following marketing strategies.
The menu while maintaining international
standards caters to regional tastes. Besides maintaining international
favorites or flavors in Sri Lanka, there is a choice of chicken spicy burger,
especially designed to titillate the Sri Lankan taste buds. McDonald’s success
in Sri Lanka is because of McDonald’s ability to adapt to Sri Lanka,
particularly to suit local palates, while maintaining strict manufacturing
standards by providing customers with consistent quality service, cleanliness
and value for money.
They
offer a special menu for breaking fast. For example during the Ramazan month.
Throughout they have recognized the
importance of serving qualitative tasty food that combines essential nutrients
that make for healthy living. The company seeing the need for a fast moving
quality morning meal introduced the Sunrise meal. The keystone of their
philosophy is to sell the experience and not the hamburger,
McDonalds target is to attract the kids. More often the kids are left out
by their parents. McDonald’s concept is to pay attention to the kids. They
follow the maxim that today’s kids are tomorrow’s customers. We intend creating
a McDonald’s culture of dining while socializing that is uniquely McDonald’s.
They attract the kids by our special premium distribution programme where every
kid is given a small gift.
They introduced to the McDonald’s outlet is the McStop Kerb Service.
Explaining the process, this concept facilitates quick delivery. One needs walk
to the restaurant to place orders. Orders are taken through walkie talkie
communication.
They have a large staff, working at Colpetty and Rajagiriya and it keeps
increasing. Human resources nevertheless are an integral component for the
success. As long as they believe there are challenges ahead, there will always
be an opportunity to grow both personally and professionally. They are not just
offering a progression of title thoughts. They wish their employees to enjoy
their careers and grow more valuable every year. That is value added service.
At all McDonald's Restaurants in Sri Lanka,
the food served is 100% Halal certified by All Ceylon Jamiyyathul Ulama
McDonald's welcomes all their valued Muslim customers and assures them of
totally halal food. Every effort is made to ensure that the susceptibilities of
every customer are adhered to the best of the ability of the management of
McDonald's.
