Culture-Based Product Classification in Global Marketing for Competitive Advantage - Case Study Example

McDonald’s Case Study Student’s Name Institution Date McDonald’s Case Study Part 1 McDonald’s is one of the largest fast food retailers across the world. The firm has operations in different countries across the world, which has made it become one of the most valuable brands in the world. The company serves millions of consumers spread out in different geographical regions across the world. There are various cross cultural issues that have an impact on its operations in different global markets. McDonald’s is one of the first western fast food firms that embraced the concept of globalisation which encouraged it to expand its operations into other foreign markets. This requires the firm to make its business models and market practices conform to social, cultural and economic ideals that are observed in different global regions it operates in. This paper will discuss McDonald’s operations in India and why they need to conform to social and cultural practices observed in the country (Mooij 2003). India is one of the most culturally diverse countries in the world with a population of more than 1 billion people. McDonald operates in the country’s major cities and has managed to develop close relationships with different customers in the country. The establishment of McDonald’s in the country offered it an opportunity to develop an effective business model that would help it compete effectively with other firms in the market. The firm first set up its operations in the country in 1996 and it had to deal with many challenges before gaining a foothold. It established a joint venture with several Indian businessmen who operated the firm’s franchises in different parts of the country. The firm’s superior branding concepts resonated well with different consumers in the market, because many urbane Indians were aware of its high quality service offerings (Vignali 2001). McDonald’s has operated in the country for more than 17 years which has made it focus its attention on serving changing consumer needs in the market. The firm’s consumer service had to conform to local practices and expectations, different from services it offers its consumers based in other parts of the world. The culture practiced by many Indians is mainly influenced by their religious and ethnic backgrounds (Xie 2007). Many people in the country still cherish their social values despite being exposed to various western influences. As such, McDonald’s has to ensure that its customer service employees are equipped with appropriate skills to perform the firm’s functions in the Indian market more effectively. The firm needs to personalise its service offerings to enable it build and sustain strong relationships with its customers. The firm needs to make consumers to develop more favourable attitudes towards its products to improve its performance in the market. The firm needs to initiate effective marketing strategies that are responsive to different consumer segments in the market. The marketing strategies used need to appeal to a broad base of consumers to make its products more competitive in the local market. Xie (2007) argues the firm needs to study peculiar consumer behaviour traits that are practiced in different parts of India to develop an effective long term strategy in the market. The firm needs to take note of consumers’ lifestyles, religious backgrounds, income, age, marital status and other factors to help it define different consumer profiles that exist in India. It also needs to take note of how these factors influence different consumer spending habits in the market to come up with effective business strategies that can appeal to them. The firm needs to ensure that all product concepts reflect consumption trends in the market to help it achieve its medium and long term objectives. McDonald’s marketing mix needs to focus on unique lifestyle habits practiced in different parts of India to find out how they may affect its operations. The firm needs to create a branding strategy that communicates its vision and product qualities to different consumers based in various Indian market segments (Subramanian 2001). The firm needs to adapt its product development strategies to local situations to make them get positive responses from consumers. It also needs to focus on diets consumed, culinary habits, preferred dishes and specific cuisines which are consumed in India to find out how they affect its operations in the market. McDonald’s needs to find out appropriate products for different market segments. It needs to ensure that its local service experience has similar levels of customer service quality to the one it offer in different markets it operates in. McDonald’s product development principles need to focus on the 4P’s of marketing. These are the product, price, promotion and place. The firm needs to create marketing plans that pay attention to these factors to ensure they correspond effectively to the cultural situation that exists in the Indian market. India has diverse religious, cultural and social groups which have unique culinary habits (Kim Forsythe & Gu 2002). Hindus, who form the majority, do not consume any beef products. The country also has significant numbers of Muslims, who do not consume pork and Jains, who do not consume any animal products. These peculiar eating habits require the firm to come up with an effective product development strategy to ensure its products are suitable for different market segments in the country. The firm also has to contend with buying behaviours which exist in the market. India is a price sensitive market where different consumers are easily attracted to low priced substitutes. As a result, consumers are likely to be encouraged or discouraged to purchase a particular product due to its price. Since the firm has strong brand qualities, it needs to offer its consumers high quality products to increase its appeal in the middle and upper income segments of the market. Viswanathan and Dickson (2006) argue that the firm needs to use an effective segmentation strategy to help it appeal to different sets of consumers based on geographical locations, income groups, age, religious background and social exposure. This will help it integrate its marketing concepts into other important operations to help it make a lasting impact in the market. Part 2 McDonald’s needs a business strategy that conforms to different cultural practices which are cherished by Indian consumers. The firm needs to take note of political, economic, social and technological factors that have an impact on its operations in the market. The firm also needs to understand the legal environment it is going to operate in and how this will affects its engagement in the market. As a consequence, the firm needs to make sure that it complies with different regulatory factors that have been enforced by the Indian government to make its operations run smoothly without a hitch. There are different cultural, environmental and economic factors that will determine the impact of the firm’s operations in the country. It is necessary for the country to take strong initiatives to make its operations in the country more competitive (Viswanathan & Dickson 2006). The firm also needs to adapt its products to ensure they suit specific conditions which are observed in the country. The marketing mix of product, price, promotion and place will enable the firm to devise effective marketing strategies which satisfy consumers’ needs and expectations in the country. The firm needs to take note of menus that display its products in different regions to ensure they do not contain food products that are considered unclean due to various religious and cultural beliefs. For instance, the firm needs to be careful about products it sells to its consumers, some of whom do not consume pork, beef and other animal products. The firm also needs to be careful about the way it packages its fast food products to ensure packages used are suitable for different client segments that are targeted (Thomas 2012). Packages used need to display its brand attributes openly to make the products maintain their value in the market. The firm needs to focus on its internal operational strengths that give it a competitive advantage in the country. Since it has a lot of international experience, the firm needs to implement effective business practices that will help it get positive returns on its investments in different parts of the country. McDonald’s needs to have an effective positioning strategy that makes consumers aware of the value proposition its products and services offer them. The firm needs a long term vision that focuses on approaches it will use to appeal to consumers in the market to make them understand the value of its products (Craig & Douglas 2006). It needs to conduct frequent market studies to find out if there are any changing trends and perceptions in the market. McDonald’s need to decide on a specific growth strategy it intends to help it expand the scale of its operations in the country. The firm needs to use a growth model that will guarantee it consistent positive results to increase its profits. The firm needs to decide whether a concentrated or diversification strategy will enable it achieve its objectives in the market. It also needs to take note of other factors in the market that are likely to affect its long term operations. This will help it institute quality measures which will give it a competitive edge over other firms operating in the market (Craig & Douglas 2006). Part 3 McDonald’s needs to use a differentiation strategy to help deliver high quality products and services to its Indian consumers in different market segments. The firm needs to look at the potential demand for its products in the country to find out how this impacts on its overall budget. The firm has a strong brand image, which this serves it well in the market. Many consumers recognise the value of its brand which is associated with superior quality products it sells in the market. Vrontis and Pavlou (2008) state that the firm needs to adopt a concentrated strategy to help it to penetrate the market easily. India has a large population and this makes a concentrated strategy suitable for the firm’s operations in the country. There are other external factors which are likely to affect the firm’s operations in the market. McDonald’s has managed to use a cost leadership strategy in various markets because its products target general consumer populations. However, India has peculiar consumers whose consumption habits are heavily influenced by their religious, social and cultural backgrounds. Therefore, a cost leadership strategy may not achieve the firm’s objectives in the long term because many consumers in India are generally price sensitive. It needs to use a strategy that provides unique service offerings which are synonymous with its global brand values that have made it one of the most valuable fast food chains in the world world. There is a strong link between consumer values, needs and purchasing behaviour in India (Vrontis & Pavlou 2008). It is important for the firm to standardise its products to make them appeal to different market segments in the country. A strategy that conforms to local consumer values and needs will make the firm’s customers more loyal and this will improve its performance in the market. The firm also needs to use effective retail channels through which its products will be sold to different consumers in the market. This will allow its customers to access its products easily. The firm needs to understand how the location of its fast food outlets will affect the quality of service it offers its consumers (Doole & Lowe 2008). Since it targets a large number of consumers, the firm needs to locate its outlets in upper class locations which have a lot of human traffic. It needs to be located in areas that are frequented by consumers such as railway stations, shopping malls or financial centres to make its point of sale outlets more accessible to consumers. The Indian market requires a more personalised approach to make consumers more trustworthy about the product being sold. This will help it entrench itself in the market to give its products a wider appeal. Adaptation will make McDonald’s create valuable products that are able to compete effectively with other products in the market. For instance, Jains prefer strict vegetarian meals which are not mixed with other food preparation processes for animal products. Doole and Lowe (2008) reveal that the firm needs to use innovative approaches to launch new products which conform to high expectations of consumers in the country. To achieve this, the firm needs to have effective Research and Development departments to help it develop new products that set innovative trends in the market. The firm’s R&D teams can develop revolutionary products, using locally available food materials packaged in formats that are appealing to consumers. The R&D department will be able to find out specific tastes, aromas and flavours that need to be used to McDonald’s food products more appealing to consumers. The firm needs to undertake effective consumer approaches to understand their desires and needs to create high quality services that satisfy their expectations. The firm also needs to invest in value addition to help it stand out in the market. Home delivery services offer the firm a good opportunity to give its customers improved service quality to make them appreciate the value of its services. Home delivery allows the firm to make improvements in its value chain processes to ensure it sustains a positive impact in the market (Lassar & Kulkarni 2009). The firm needs to devise technological solutions that allow its customers to order food conveniently without delays to ensure they get their orders within the shortest time possible. The firm also needs to strengthen customer service to ensure that it has adequate numbers of employees required to respond to consumer’s queries. The firm needs to hire customer service employees who are fluent in local languages and understand how to satisfy the needs of different customers who make inquiries. Recommendations McDonald’s needs to devise effective market strategies that enable it increase its share of the fast food market in the country. The firm needs to use both concentrated and diversification strategies to help it increase its market share in the country. A concentrated market strategy will enable the firm to make its operations more efficient by reducing unnecessary costs (Little &Marandi 2003). This will enable the company to penetrate the market more to increase the number of its customers. A diversification strategy will also make the firm to expand the number of products and services it offers its markets to give it more revenue streams (Lassar & Kulkarni 2009). This approach will require the firm to develop its R&D functions to make its production processes more innovative. However, the firm needs to ensure that product expansion is in line with its overall objectives in the market to improve its competitive edge in the market. Monika and Morven (2005) reveal that McDonald’s needs to make its value chain processes more efficient to increase its unique service proposition (USP) in the market. Telephone and internet based ordering systems need to be more efficient to ensure its customer service staff respond to client’s orders promptly. The firm also needs to be aware of other challenges that are likely to slow down the way it offers consumers its services. It needs to streamline its supply chain processes to ensure raw materials required to prepare different products arrive in its fast food outlets on time (Bryman & Bell 2007). The firm also needs to streamline its payment procedures to give consumers more convenience when they are ordering for products. It needs to include secure electronic payment systems as part of its payment procedures to give consumers more efficient payment options. The firm also needs to establish ways through which consumers can give feedback regarding the experience they get whenever they consume its products. McDonald’s needs to train its employees to make them well equipped to deal with different conditions that are peculiar to the Indian market. The Indian society is highly integrated because people value family and societal connections. This differs with European and North American societies which are highly individualised. The firm needs to hire employees from the country who are familiar with languages, social issues and other factors that are cherished in the country (Herrmann & Heitmann 2006). It also needs to use advertising campaigns that target specific market segments in different areas to make a positive impact. It also needs to offer consumers nutritive food products that have low fat and sugar content. This will help it deal with concerns that its products increase the level of obesity in school going children. The firm also needs to conduct regular inspections of its facilities to ensure they conform to all regulations that have been put in place by the government. 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