Attached.

Running head: MCDONALD’S MARKETING STRATEGY

(Author’s Name)
(Institutional Affiliation)
(Course Name & Number)
(Instructor’s Name)
(Assignment Due Date)

1

MCDONALD’S MARKETING STRATEGY

2

PART 1
Introduction
History of the McDonald’s
McDonald’s corporation, the second-biggest fast-food company in the world,
commenced business in 1940 with its founders being Maurice and Richard McDonald. The
founding of this company came after a lot of failed ventures by the two brothers. In 1920 the two
brothers moved to California with very big and ambitious dreams of becoming millionaires
(Gorham et al., 2016).

Their preferred venture was in the filming industry, that at the time was

very lucrative. Therefore, in the 1920s they opened a movie theater but the business closed after
the great depression of the 1930s (McDonald, 2011). Still ambitious, the two-brother decided to
venture into the food business. They started simply by opening a hotdog stand selling mainly
hotdogs and burgers and soft drinks. During the same period, their father Patrick opened a food
stand in Huntington Hollywood, and in the 1940s the two brothers joined their father. The two
shifted the business model and strategies to those of fast-food service. Therefore, they created a
restaurant that allowed people to eat their food and leave the restaurant faster, thus the name
‘fats-food’ joint. Additionally, the price was a very big consideration. In business, there are two
ways to make a profit. The first is to increase the profit margin per unit while the other is to
reduce profit margin per unit but increase the sales volume (McDonald, 2011). The brothers
choose the latter. To attract customers, McDonald's restaurant sold burgers for as cheap as 15
cents.
Other strategies adopted include a self-service system for drive-ins. Popular around other
places, the two brothers sought to change the drive-in service delivery. They redesigned their
restaurant to enable fast drive-in take-outs where the customers would spend less than a minute

MCDONALD’S MARKETING STRATEGY

3

to be served and drive away. This strategy enabled the business to maximize the number of
customers served in a day. Additionally, to actualize this strategy there was specialization in the
kitchen, where one group of staff took orders from the customers, another cooked, another rolled
and packed and the other served (McDonald, 2011). Moreover, they specialized in their menu only
focusing on the products that brought the most profits. For example, they eliminated hotdogs,
coffee, and root beer to fries, burgers, and milkshakes. Efficiency was key to the success of the
business in the early years. As the business grew in revenue the brothers decided to expand. They
tried franchising the business in several towns. However, this did not succeed due to the loss of
control over the business.
Globalization
The McDonald’s brother may have been credited for starting the business, however, Ray
Kroc is responsible for the successful franchising of the McDonald’s. After meeting with the two
brothers in 1954, he loved the McDonald’s restaurant and saw a business opportunity and
decided to franchise it. Reluctant at first to give their business idea to Ray, the two brothers
finally accepted on a deal that they would get 0.5 % of gross revenue to all franchises (Gorham et
al., 2016).

Ambitious, Ray Rock went on to open over 100 restaurants by 1959. He created the
brand of McDonald’s we know today by commercializing the business. He sort to distinguish the
restaurant from all the others by designing the McDonald’s golden arches and the red and white
tiles in all the franchises. He maintained the standards of the original McDonald’s restaurants as
well as develop more himself. In 1961 due to disagreement in their contract, Ray Kroc bought
the McDonald’s franchise from the two brothers for $ 2.7 million. He henceforth became the sole

MCDONALD’S MARKETING STRATEGY

4

owner of the company. At the time of his death, the company had over 7500 restaurants in over
20 countries.
McDonaldization
Globalization in the world today has led to the intermingling of culture from all over the
world. This interaction between people has affected all aspects of our society such as in
healthcare provision, education, cuisines, architecture, and fashion. Communication and ease of
travel have been the major contributors to this process. To describe the diffusion of culture
George Ritzer in 1993, coined the term McDonaldization from the fast-food restaurant, which is
used to describe how societies all over the world adopt the features of the fast-food company
(Crossman, 2019). Over the years, this term has become widely accepted in various spheres. This
is mainly because McDonald is a brand known all over the world and is a very influential
company in the food industry.
George Ritzer's primary use of the world focused on four major principles, efficiency,
calculability, control, and predictability. The efficiency principle dictates that organizations, as
well as individuals, will always use the shortest and the most optimal method to carry out any
task. For organizations, this is cost-effective while to individual it assures the least energy used.
The calculability principle states that the objectives of the organization computable in terms of
numbers. This makes it easier to predict and measure progress (Güldaş, 2011). Thirdly,
predictability states that organizations around the world should try and uniformly provide their
services. Ensuring that whenever their customers go, they would get the same quality of service
from the organization. Lastly, control spells out that there should be standardization of both
human and non-human resources at any organization. This ensures that whenever an
organization internationalizes quality of service is uniform.

MCDONALD’S MARKETING STRATEGY

5

Despite the big success in the neighboring countries, the real growth test came when the
company expands overseas to countries such as the United Kingdom, India, China, South Korea,
and Russia. These countries had very different markets with different customer preferences from
home. The cultural differences meant that McDonald had to adapt to the new market
nevertheless maintaining its business model, products sold, and style of operation. To overcome
this challenge, the company did intensive market research on the people in the new market to
understand their way of life and preference. As a result, McDonald succeeded. An example in
Indian where people do not eat pork or beef for religious reasons, McDonald offers beef-free and
pork-free menus.
Additionally, whenever McDonald enters a new market it is very keen to embrace the
people in the region to allow faster penetration. This is done by using local ingredients such as
the use of Cantonese comfort food ingredient usage in China as well as the employment of
resources as such human resources in the region. This ensures that the company not only grows
but also promotes local industries in the region.
The four principles used by George Ritzer are incorporated into the company’s global
strategy. The company is very efficient in its operation to ensure cost-effectiveness which then
transferred to the customers through low-prices. All the business objectives are quantifiable such
as sales and expense. Finally, despite the difference in menus from different regions, McDonald
ensures that all its services and style of operation are standardized. This ensures that whenever an
American enters a McDonald restaurant in the UK he/she gets the same services as the would get
back home.

MCDONALD’S MARKETING STRATEGY

6

PART 2
INDIA
Overview
India is one of the largest economies in the world. According to, the country is the sixthlargest in the world just behind France based on nominal GDP. In terms of purchasing power
parity, it is placed at third, only behind China and the USA (Bureau, 2020). In another article by
Prableen Bajpai, India is the fifth fastest-growing economies (Bajpai, 2019). These statistics
attract a lot of international attention with investors very keen to invest in the country. Moreover,
India is a very unique country in that it is the only third world country in the top ten economies
in the world. The biggest factor contributing to this unique situation is that India is very
populous. The big population means that India demands, needs, and consumption of resources is
on a very humongous scale. Additionally, it means that the country is has a large labor force.
Considering it is a developing nation it means that the labor is cheap. This cheap labor is in very
high demand by international companies. Also, the population provides a huge market for goods
and services. Therefore, India is a country that no international company can ignore. This section
will look at India’s demographics, culture, economy, and political and legal system to understand
McDonald’s success factors and challenges in the country.
Population and Population Growth
According to K. M. Shembavnekar in his research report “The Population of Ancient
India (500 B.C to 100 A.D)” in 1952, he asserted that India’s population in 1 A.D was at about
60 million inhabitants (Shembavnekar, 1952). Based on world population statistics of
worldometers this would place India as the twenty-fourth most populous country in the world

MCDONALD’S MARKETING STRATEGY

7

today. At the onset of the Industrial Revolution in the late 18th century, the population of India
was about 200 million (Worldometers, 2020). This shows that India over history has always been
highly populated. Today it is the second-largest country in terms of population with over 1.3
billion people and the seventh in terms of land size. This places it 29th in terms of population
density.
The population growth rate in India has always been relatively higher than in other
regions and countries. A historical review of the growth shows that the country has an average
growth rate of 5.3 % during the classical era, 1.9 % during the early Medieval era, and 8.1 % in
the late Medieval era. The Mughal era that lasted only 100 years saw the growth rate
tremendously increase by 31.9 %. The Indian Mughal empire during its reign conquered
territories, and increased trade for India (Goli, 2013). The prosperity of the empire leads to an
exponential growth of the population. However, this era ended when the British invaded and
colonized the country in the late 1700s. Nevertheless, the population growth of India averaged
12.2 % until it got its independence in 1947.
The growth rate of the country since 1900 can be divided into four distinct phases. The
first phase is the period of stagnation which lasted between 1901-1921. The annual population
growth rate was barely less than 1 %. The population was stagnant, meaning the number of birth
rates was almost equal to the death rate. Between 1921 and 1951 came the second phase where
there was a steady annual growth rate- an average of 1- 1.35 % every year. This increase was due
to improved sanitation, healthcare, and education. The third phase was between 1951 to 1981,
the population explosion phase (Debasish, 2019). This period saw India have an annual growth
rate of 2.2 % annually. By the end of this period, the population was above 700 million people
up from about 250 million at the beginning of the century. Among the biggest contributors to this

MCDONALD’S MARKETING STRATEGY

8

increase was the increase in immigrants in the country. The last phase began in 1981 to the
present day. The increase in this phase was still high but with signs of slowing down. The annual
growth rate has dipped from 2.1 % in 1981 to 0.98 % in 2019 (Debasish, 2019). This is due to
family planning advocation to the masses and an increase in emphasis on the importance of
women's education. Despite this reduction in the rate of growth, projections assert that India will
surpass China to become the most populous country in the world by 2030 (Osborne, 2019). This
is because the country has a younger average population than China which has an aging one.
The major contributors to the huge increase in India’s population growth include vast
arable lands that provided food for the population. This land size also attracted immigrants who
moved from densely populated areas to India. The second factor is India is one of the earliest
civilizations. Archeological evidence shows the existence of advanced civilization way before
2500 BC (Goli, 2013). This means that the country formed an organized society way before
many regions did. Thirdly, is the trade activities of the country with neighboring countries and
regions. Records show trade in India as early as 3 B.C.E where Indians traded with Sumerians.
Additionally, India facilitated the exchange of goods as many trade routes from Europe to Far
East Asia passed through the country. This means that the country has an extensive history of
accommodating foreigners and this led and continues to facilitate the exchange of goods,
services, and ideas.
Demographics
Age
The median age of India as of 2020 is at 29 years according to the government report
(Affairs, 2019). This makes the country a young nation- showing the country’s population is
bound to continue increasing and will only stabilize late in the present century. This median age

MCDONALD’S MARKETING STRATEGY

9

shows that the country’s biggest population is made up of young working-class who are
energetic to offer labor services.
Sex
In terms of sex, 48 % of the population is female. Over history, the population of women
has always been relatively low as India was a patriarchal society. Men and boys were given
priority. Women face challenges such as early marriages, were at times treated as properties, and
were not given preference when it came to education (Goli, 2013). However, most of this has
changed, and slowly the population’s sex ratio is balancing.
Religion
There are four major religious groups. The Hindus make up the largest group at 79.6 %,
followed by Muslims at 14.2 %, Christians at 2.2 %, Sikh at 1.7 % while others make up the rest.
This distinction in religious groups was a very big consideration in McDonald’s entry into the
country (Goli, 2013). Additionally, with Hindus dominating the population, the laws and cultures
of the country are predominately Hindu-based.
Education level
The literacy level of a country is a good assessor of the country’s quality of human
capital. According to a report by Observer Research Foundation in 2019, Indian’s literacy level
is at 73.2 which is significantly lower than the global average of 86 % (Chandra, 2019). Women
to men's literacy ratio is at 0.8 with only 65.4 % of women being literate. These statistics are
bound to improve in the future as the government increase emphasis, effort, and funding of
women education.

MCDONALD’S MARKETING STRATEGY

10

Income level
The unemployment rate in India according to Trading Economics is 8.4 % as of 2020,
which is before the COVID-19 pandemic. This is a good stat, however, unemployment among
youth aged between 15-29 years is at 23 %. This is among the highest in the world.
As of 2019, the per capita income of India was at $ 2104 according to the World Bank’s
latest report (Bank, 2019). 50 % of the country makes less than $ 2000 annually, 30 % earn
between $ 2000-4500, 14 % over $ 4500-11000, another 14 % earn $ 11000- 23000 and a small
2 % make up the richest earning above $ 23000 annually (Imrg, 2019). With the poverty line at $
12760, annually about 60 % is below the poverty level- low-income earners. This is mainly
because the biggest chunk of this population works in the informal sector of the economy.
Marital Status
Family is the smallest unit of society and marriage is considered sacred in the Hindu
religion. According to Hindu law, all Hindus are expected to marry. As a result, the family plays
a big role and significance in the social composition of the country. This factor was very crucial
to McDonald’s marketing strategy.
Culture
India’s culture is predominately Hindu based as it is the predominant religion in the
country. This means that the cow is considered sacred in the country.
Economy and Market
With a nominal GDP of $ 2.9 trillion and GDP PPP of $ 11 trillion in 2019, India ranks
top five of the biggest economies in the world. The average economic growth rate has stood at 7
% in the last decade. For a long time, India had advocated the protection local industries through
protectionist policies. However, in 1991 the country changed its economic policies to attract

MCDONALD’S MARKETING STRATEGY

11

foreign investment after it experienced a severe balance of payment (Adhikari, 2019). The third
biggest sectors are the service sector, industrial sector, and agricultural sector respectively. With
a very big workforce service sector makes up over 55 % of the country’s GDP.
The top exports for the country are chemicals, textile goods, software, petroleum
products, and manufacture leather goods. On the other hand, imports include fertilizers, gems,
machinery, and crude oil (Pangannavar, 2015). The latter is more than the former. The biggest
trading partners of the country include the United States, China, Germany, Saudi Arabia, Japan,
UAE, Russia, Indonesia, and Switzerland.
Among the biggest contributors to the growth rate in the country is the ability of citizens
to embrace new technology, ideas, and foreign business. Notably one of the country’s biggest
exports is software. This ability to embrace technology has made India one of the biggest
pioneers of technological advancements in the world. Also, with technology play a very key role
in business today, the country is very prime for many foreign companies in the world.
Political and Legal System
The country is under a democratic government, with the president as the head of state.
This means that the country conforms to the most international laws which are based on
democratic policies. Since 1991, the government has increased its effort to encourage foreign
investment as a way to improve its economy and remain competitive in the world. This has been
achieved through the simplification of business laws, introduction of the PAN number that helps
monitor transactions of both individuals and corporates, and reduction of corporate taxes of both
foreign and local businesses. This puts the country as the 63rd easiest country to do business
according to world bank rankings in 2019 (Bank, 2019).

MCDONALD’S MARKETING STRATEGY

12

Foreign Direct Investment has been slowly increasing over the years as the country laxes
its policies to encourage foreign investments. 2019 saw a 16 % increase in the FDI from 2018 to
reach $ 49 billion (Malhotra, 2019). This bound to increase even further as India seeks to
increase competition against its neighbors including China, Pakistan, and Turkey to be a business
hub in the region. Currently, there are over 40000 multinational companies in India. These
numbers continue to attract even more investors.
Being a third world country, one of the major challenges that the country is facing is poor
infrastructure. In its 2030 vision and plans, the Indian government plans to invest more in roads,
communication, and technological infrastructure. Moreover, in its future plans, the country is
aiming to increase renewable energy usage and reduce emission to zero by 2050 by increasing
investment in solar and wind sources of energy (Varadhan, 2019). This is tremendous
considering that the world is keen on India’s population statistics which are mainly caused by its
big population.
Another big challenge for the country is security. India has been known over history to be
involved in skirmishes with its neighbors mainly Pakistan and China, with the former being the
longest. India and its direct neighbor, Pakistan have been at war and prolonged tensions over the
control of Kashmir since 1947. One of the longest dispute was one that span between 1971 to
2003 (Chaudhuri, 2019). Even after the war ended, tensions continue to exist between the two
countries. However, due to military investment by India more than Pakistan in the recent past,
the latter has backed down from major conflicts. Nevertheless, India continues to be in conflict
with China and Turkey over resources. Though in the past few years the environment has been
relatively calm without any major conflicts.

MCDONALD’S MARKETING STRATEGY

13

PART 3
McDonald’s in India
Overview
McDonald’s revenue in India in the financial year 2019 was about $ 190 million. This is
the highest the fast-food company has made in the country. In 2020, during the half-year report,
these numbers shot up by 228 % (Kannan, 2020). This is mainly due to the increased homed food
delivery services due to the COVID-19 pandemic. Nevertheless, historical data shows that the
company’s revenue has been steadily increasing over the years.
McDonald’s entered the Indian market in 1996. To penetrate the company partnered with
two businessmen, Vikram Bakshi who was in charge of the North and East India (Connaught
Plaza Restaurants), and Amit Jatia who controlled West and South of India (Hardcastle
Restaurants). The two worked separately in different regions but maintained the McDonald’s
food standards (McDonald, 2015). Each region kept separate books of account and had different
strategies to penetrate the market in each of the regions. McDonald’s took over 20 years to make
a profit in India. According to the India Times, the company made its first profit in 2018- as it
got 8 % royalties from the two partners (Kannan, 2020). Of the two partners, Connaught Plaza
Restaurants was the first to find a breakthrough in India. Struggling, Amit Jatia wanted to but
Connaught Plaza but the Vikram disagreed with the idea. That started their long court battles
which ended up with Vikram losing his McDonald’s share in 2019.
Nevertheless, despite the conflict between the two partners, McDonald’s has had success
in the Indian market due to its marketing and business strategies. India was a very unique market
in terms of its demography which includes population, religion, income levels, and culture. This
part will explore McDonald’s marketing strategies as it penetrated the Indian market. It will

MCDONALD’S MARKETING STRATEGY

14

ignore the different strategies used by the two partners and only discuss the McDonald’s
strategies as a whole.
Market Strategies
India was a very unique market for McDonald’s. It took the company 22 years to make a
profit. With this in mind, McDonald’s had to be very strategic in its ventures in the country.
Using the 4P’s, this section will analyze the marketing mix that the company used to penetrate
the market.
Product
McDonald’s main selling points are its burgers, French fries, and soft drinks. These are
the same products that the first McDonald’s started with. However, as the company grew and
went international, it diversified its menu it includes different meals to suit the need of the
customers (Cateora et al., 2013). Nevertheless, the three meals are included in all countries just
with a bit of twitch.
Most people in India are primarily vegetarian. With most meals on McDonald’s menu
incorporating meat, the company had to change its menu. In the burgers, McDonald restaurants
serve them with patties in place of the meat. The patties are made up of corn, potatoes, or carrot
which are deep-fried, and combined with cheese and lot...