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Retail Marketing of McDonald’s in India



Marketing of McDonald’s in India

Nowadays, retail marketing is deeply rooted in the life of companies engaged in retail trade. Retail marketing is, in essence, the whole art of attracting, preserving, and enhancing the number of consumers through the persuasion of each buyer that he or she represents the highest value for the company. The company that successfully mastered this art is McDonald’s. It is one of the largest chains of fast-food restaurants worldwide.

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Even though the main hallmark of McDonald’s is the production of beef burgers, it successfully entered the Indian market where the majority of the population does not eat meat and considers the cow a sacred animal. To adapt to such a challenging environment the company had to change its strategy and rebuild its retail mix. Therefore, for the prosperity of the company, each element of the retail mix is very important: merchandise range, retail communications, store design, customer service, location, and pricing strategy. This paper aims to evaluate the retail mix of McDonald’s in India and analyze the main challenges of the company’s international growth.

Merchandise Range and Assortment

The main sale items at McDonald’s in India are products ready for consumption, in other words, the ready meals, cooked in a fast way from semi-finished and fresh ingredients. McDonald’s keeps its product range limited with almost its own-label items only (Macdonald’s India, n.d. a). It offers such products as sandwiches, potatoes, vegetarian pizzas, meals for children, desserts, drinks, and salads. Sandwiches, in particular, are chicken, lamb, fish, and vegetarian ones while potatoes are of small, medium, and large size. Concerning the desserts, they include McSwirl, Soft Serve, Brownie & Hot Fudge, and McFlurryTM of different tastes; drinks are tea, coffee, Coke, Fanta, juice, and McShake of different tastes.

In addition, in 2013, McDonald’s added a new line of premium coffee to their menu which led to the creation of McCafe that now offers beverages and desserts unavailable at McDonald’s (McDonald’s, 2010). Thus, the restaurants’ assortment profile and merchandise strategy are rather narrow and deep. Nevertheless, McDonald’s India constantly creates something new, as its main products are faddish ones and their lifecycle pattern is predominantly “growth-slump-maturity”.

Due to the unusual culture of consumption in India, McDonald’s had to create a completely new menu that is not similar to any other in the world. McDonald’s India does not sell ham, beef, or mutton. Instead, the menu offers a great variety of chicken and vegetarian products. For example, McVeggie, apart from salad and sauce, includes vegetable cutlet, made of peas, carrots, and potatoes; Chicken Maharaja-Mac is a Big Mac where chicken is used instead of beef (Macdonald’s India, n.d. a). Interestingly, McDonald’s vegetarian menu is present only in India. Even sauces are without eggs and include local spices. The essential features of the goods offered are their quality and safety.

Additionally, McDonald’s menu is often influenced by the restaurants’ location within India: in West India, the menu includes Vada Pav or Dahi Vada, in East India – Kebabs or Pani Puri, in North – Chaat or Bhel Puri (Macdonald’s India, n.d. a).

Retail Сommunications

Most of the promotional strategy’s elements in McDonald’s India remain the same as in other parts of the world. McDonald’s, therefore, utilizes store-based and market-based promotional methods. The main promotion channels include personal selling, POS displays, in-store promotions, sales promotions, advertising, public relations, and direct marketing (McDonald’s Corporation, 2008). While advertising, McDonald’s is guided by its three main goals: make the customer aware of the product, create the customer’s positive attitude to it, and make the customer remember it.

Moreover, McDonald’s in India promotes its products through TV, billboards, bus stops, radio, cinema, internet, posters, and the press. (McDonald’s Corporation, 2008). Some of the most famous marketing campaigns of McDonald’s are: "I'm loving it" – the most successful international branding campaign; “Aap ke zamaane mein baap ke zamaane ke Naam” – a locally based campaign oriented on attracting the customers through the happy price menu which low prices are of the previous generation (Adgully Bureau, 2011).

McDonald’s India also strives to attract children to restaurants. Each Happy Meal includes a toy that corresponds to the new cartoons liked by children (Macdonald’s India, n.d. c). Furthermore, there is always a doll of Ronald McDonald at the entrance to the restaurant to attract children’s attention. The Happy Meal film is regularly shown on the Cartoon Network and the Zee (a local channel). McDonald’s also cooperates with Delhi Traffic Police and Delhi Fire Service to highlight safety issues and create goodwill among schoolchildren. The company also runs special promotions during festivals and ‘vegetarian’ days.

In addition, McDonald’s communicates its brand through golden arches that symbolize the capital letter "M", causing awe in children’s hearts and rumbling in the stomachs of adults (McDonald’s Corporation, 2008). Finally, McDonald’s India uses such promotional instruments as sales promotions, visual merchandising, direct mailing, and loyalty programs (McDonald’s Corporation, 2008).

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Store Layout, Design and Visual Merchandising

The layout of McDonald’s restaurants is free-flow as in the entire world. In the interiors, one can observe a certain degree of fun and happiness that McDonald’s aims to provide to its customers. It also offers a proper hygienic atmosphere, Internet facilities, and music preferred by the young generation mostly. Furthermore, there are indoor Play Places for children in restaurants to attract urban families that would like to spend quality time while their children have fun. Among teenagers, McDonald’s restaurant is also considered a nice place to spend free time. In addition, an individual is serving over the counter, special displays that show the menu with the product range and prices so the customers can quickly choose what they want and see how it looks like.

Moreover, the vegetarian menu is separated from non-vegetarian one by different columns and colors (Pangarkar and Subrahmanyan, n.d.). Concerning McDonald’s exterior, one can find special drive-throughs, where a customer can make an order without leaving a car. Lastly, visual merchandising is strongly present in McDonald’s India stores through succulent images of food in interior and exterior, which is done with a purpose to attract customers. The same effect of attraction is created by a strong smell of McDonald’s food.

Customer Service and Facilitating Services

McDonald’s in India, as in the rest of the world, aims to provide fast and friendly service. According to the restaurant’s policy, the customer always stands in the first place and, therefore, should be served friendly and attentively. The employees take orders accurately and provide customers with napkins or straws, anticipating their needs. Moreover, if it takes too much time to provide the order, the employee will present the customer with free ice cream or drink. If the customer accidentally drops the food, he/she will be given a new one free of charge. Besides, each restaurant provides free Wi-Fi service (Macdonald’s India, 2013).

The distinguishing feature of McDonald’s Indian restaurants is that there is a home delivery service “McDelivery” throughout India. Finally, thinking about its vegetarian customers, McDonald’s India always separates vegetarian and non-vegetarian products starting from the farm step and ending with the delivery step (Macdonald’s India, n.d. b).

Formats and Locations

Nowadays, McDonald’s India has 300 outlets, the biggest part of which are in North India (Macdonald’s India, n.d. d). Most of the McDonald’s restaurants are located in Delhi and Mumbai or their 500-km radius. Such preferences in location one can explain with a large number of the citizens, and the fact that there lives the richest population of India that is aware of McDonald’s foods. Besides, the inhabitants of both cities like to experiment with food. It is also necessary to stress that the biggest distribution centers of McDonald’s are exactly in Delhi and Mumbai (Dash, n.d.).

To continue, McDonald’s outlets are usually in places of tourists’ appeal and eating-out culture (Indian Mirror, n.d.). Having regarded the large buying potential of lower-middle-class Indians, the company also located many outlets at railway and bus stations. In addition, there is an enormous quantity of outlets near petrol stations along national highways and in shopping malls. Thus, common McDonald’s formats and approaches to the restaurants’ locations are carefully followed in India (Dash, n.d.).

Pricing Strategy and Tactics

Predominantly, McDonald’s quick growth in India can be attributed to its effective pricing strategy and tactics. Since each Indian household spends about 50% of its income on food, it is a sensitive issue. Even the middle-class remain price-sensitive (Dash, n.d.). Thus, McDonald’s prices in India are lower than in other countries and the main pricing strategy is “Everyday Low Price” (Mathur, 2011). Besides, in India, one can find many small food retailers that sell products at very low prices, so McDonald’s has to consider this.

Furthermore, McDonald’s India products are classified into two pricing categories: branded affordability and branded core value products. The first category includes the McVeggie and McChicken burgers at Rs50-60 while the second one includes McAloo Tikki and Chicken McGill burgers at Rs20-30 (Macdonald’s India, n.d. a). Such a strategy satisfies all types of consumers. In addition, McDonald’s India has a Happy Price menu under which it sells three burgers at Rs20 each. It also has an Economic Meal that consists of a burger, small fries, and a small Coke costing only Rs89 (Macdonald’s India, n.d. a).

Competitive Advantage

McDonald’s India has an enormous quantity of direct and indirect competitors. The biggest direct competitors are KFC, Pizza Hut, Dominos, Café Coffee Day, and Barista (Kannan 2014). Thus, McDonald’s retail mix should provide a strong basis for sustainable competitive advantage.

In McDonald’s a limited range of products is presented in contradiction to the Indian street fast food that offers a variety of products. Besides, McDonald’s India product line is very similar to other Indian burger chains with a dominant Indian flavor (Sameer, 2012). Sometimes, this creates confusion among tourists from other countries who know what they want to order even before entering McDonald’s. Thus, they can choose competitors. Moreover, there is a trend that McDonald’s products are unhealthy, which also can decrease the number of customers.

However, McDonald’s offers unique products that competitors do not provide. Additionally, its product range constantly changes, which always attracts customers. Besides, the high quality of products provided speaks for itself (“Awards & Recognition” 2012). The most important product that makes the company competitive is Happy Meal: it is unique and attracts many children to the restaurants.

One of the other competitive advantages of McDonald’s is its high brand recognition that was developed due to proper retail communication. The brand represents the high quality of products and services. It is also a representation of American Business (Chaturvedi, n.d.). Customer who positively regards the American business regards McDonald’s in the same way. However, some Indians dislike American policy what creates problems for McDonald’s and deprives the customers.

The strong competitive advantage of McDonald’s India is also spending money on retail communications which makes it widely known throughout India (Dash, n.d.). McDonald’s promotion is more oriented on children, so it attracts the biggest part of Indian children and their parents among competitors. However, such focus involves losing the elder segment that the competitors capture. In addition, McDonald’s competitive weakness is that it is a foreign company: locals are better aware of the culture so they can better promote their business.

The outlets of McDonald’s are designed in a way to provide comfort to the customers and make the order time as quickly as possible. Nevertheless, this approach is not unique, and McDonald’s competitors can provide people with the same. What creates McDonald’s real competitive advantage is the indoor play areas where children can play while parents can rest.

Concerning the services, McDonald’s is losing the competitors that have waiters who themselves approach people and take orders. However, such services involve more time, where McDonald’s wins. In addition, almost every competitor has friendly and polite employees. What creates one more big advantage for McDonald’s is a home delivery service, separation of non-veg and veg food, and providing information about calories Macdonald’s India, n.d. b).

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Locations of McDonald’s outlets in India are likely the biggest competitive advantage of the company. McDonald’s outlets are always easy to reach: they are located in popular public places and different income areas. Thus, the company attracts the biggest part of customers among competitors. However, McDonald’s weakness is that there are no outlets in the southern part of the country, so competitors grab the customers there.

Lastly, McDonald’s India pricing strategy is the main competitive weakness of the company. The prices are adapted to the local incomes but still considered too high and many competitors use the situation in their favor. Besides, the promotions made are not unique: the competitors constantly offer similar promotions and sometimes even more advantageous ones.

Challenges to Continued International Growth

After making a PEST analysis, one can deduce that there are many political, economic, social, and technological challenges to the continued international growth of McDonald’s. Firstly, instability of political environment, hostilities, and totalitarianism are the strongest obstacles in the way of international growth. It is hard to establish a business in a country where it can be quickly destroyed. To exemplify, the markets of Syria or North Korea are inaccessible for McDonald’s. Moreover, there are such challenges as the absence of the government’s support of international business. Thus, the government can change legislation for fast food organizations or customs codes that can strict health standards for food items.

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Certain economic factors can also be a great challenge for McDonald’s international growth. The taxes or the customs duties can be very high, which is a great challenge for such kind of business. For example, it is more profitable to establish McDonald’s in Western Europe than in France, where the taxes reach 80% (French Property, n.d.)The biggest economic challenges also include the global financial crisis that is perceptible in the whole world, the overall level of economic development of the region, the rate of the national currency, the rate of inflation, and the unemployment rate. Thus, the poorer country is, the lower people’s purchasing power is. McDonald’s will have to make more efforts and spend more costs on adapting to the poor environment. In addition, the growth of raw materials prices can also be a big challenge for the restaurant.

Social challenges are probably the easiest challenges to adapt to. They include the pace of life, the demographic situation, living standards, the level of education, and the culture of consumption. All these factors strongly influence McDonald’s international development and can force it back. However, when using the right approach, these challenges are easy to face. Lastly, there is a high probability that McDonald’s could face social challenges in India, China, and a few Muslim countries.

Moreover, there are also many technological challenges to the international growth of McDonald’s. For instance, in some parts of Africa, the Internet and other items of technological progress are not used; no advertising media usually helps the company to communicate its brand and promote its products. Another technological challenge might be the absence of needed equipment for the restaurant, so it has to be imported from abroad, which involves additional costs.

Except for the PEST factors, a great challenge will be also growing competition in other countries because it will not only influence McDonald’s growing speed but also make it very hard for the restaurant to enter the market. However, the competitive context in countries with weak competition or its absence may be very beneficial for McDonald’s. In addition, since McDonald’s provides mainly food that causes obesity and other diseases, the growing health trend will be a great challenge for the company's international development (Financial Times Reporters, 2015).

McDonald’s will have to make efforts on changing the menu and its strategy. Moreover, McDonald’s is not the average American business, but a symbol of America and its domination. Thus, in the countries, where American business is badly perceived, McDonald’s may face great challenges. For these reasons, the company will have to make rebranding and fully change its image. Besides, when entering a new country, the business should not think to have a big brand that will be adored by everyone. Creating wrong strategies and objectives based on this perception is a great challenge that can be faced in the process of doing business.


In summary, McDonald’s India is a great example of the coordinated and well-created retail mix, which was successfully adjusted its retail mix to the complex and the completely new environment. Its most distinguishable element is the merchandise range and assortment. The menu of McDonald’s in India was effective “Indianized”: the vegetarian and non-vegetarian menu was created; beef, ham, and mutton were substituted by chicken. The promotional channels used for retail communication in India are the same as in the rest of the world.

However, the company also tries to cooperate with local organizations. The outlets’ design and customer service in Indian McDonald’s are also similar to the international ones. However, a unique feature of McDonald’s India is a home delivery service. The formats of locations are the same as in the entire world, but the outlets are not spread evenly throughout the country. McDonald’s has also adapted its pricing strategy to the local poor environment by making prices lower than in other countries.

Furthermore, McDonald’s India has many competitors, but its effective retail mix helps the restaurant to stay highly competitive and successful. The biggest competitive advantages of McDonald’s include the high quality of products, good communication strategy, retail communications’ orientation on children. On the contrary, McDonald’s biggest weaknesses are the similar design of outlets to competitors’, the absence of outlets in South India, not a competitive pricing strategy.

Continuing its international growth, McDonald’s might face many challenges that include political, economic, social, technological, and competitive issues. Moreover, it can also face such challenges as a growing health trend, bad perception of American culture, and wrong objectives and strategies established. I consider all the above-mentioned problems, McDonald’s will develop its business successfully.

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