labels: mcdonald's, nestle india, marketing - general
All for that froth news
Mohini Bhatnagar
23 September 2002

Mumbai: In yet another attempt at expanding the offerings on its menu card, McDonalds India is entering into a strategic tie-up with Nestle India for offering beverages like ice-tea and cold-coffee as well as a fresh range of desserts.

Amit Jatiya, managing director, Hard Castle Restaurants Pvt Ltd, one of the Indian partners of McDonalds India, says the new products will be on offer by 2003.

Some time ago, McDonalds India entered into similar tie-ups with Cadbury India and Coca-Cola India for McSwirl ice-cream and Georgia Gold coffee, respectively. Jatiya says McDonalds will introduce more exciting products, which have been modified and indigenised to suit the Indian palate, next year.

McDonalds launched its operations in India in 1996 with a limited menu that comprised mostly burgers and fries. Over the years, in an effort to fight customer fatigue with such a limited menu, the food chain has been introducing new products keeping Indian taste buds in mind. Products like chicken patties, alu tikki burger and the more recently introduced wraps Paneer Salsa and Chicken Mexican met with reasonable success.

This doesnt mean that McDonalds is moving away from the burger. Company officials say the burger remains McDonalds core product and by introducing new food products, it is not shifting focus away from it. The new food products are value-adds to the burger and are aimed at providing customers with a wide and exciting variety. Says Jatia: The only way to retain customers is give them multiple choices with food products that match our quality, taste and pricing.

Globally McDonalds is positioned at the lower end of the market. In India, too, the chain has made adequate efforts to position itself as affordable by introducing a number of low-priced products like the ice-cream cone (Rs 7) and later Economeals at competitive prices. Gradually, to upgrade the cone, it launched the McSwirl-vanilla ice-cream in cones topped with Cadbury chocolate, priced at Rs 12, which reportedly has resulted in cone sales increasing by 15 per cent.

In spite of all this, it has not been able to position itself as cheap. This is mainly because the entire price level in India is low. For instance, McDonalds prices could never be a match for prices of Udipi restaurants found extensively in Mumbai and southern India as well those of the dhabas of north India, which offer typical north Indian food.

Hence McDonalds fare in India is targeted more at the middle- and upper-end consumer who is adventurous as far as food is concerned and frequents restaurants, which offer varied cuisine.

Industry analysts say last months launch of two new products (Paneer Salsa and Chicken Mexican) could be a part of McDonalds strategy to strengthen its positioning at the upper end of its market, and also move away from being just affordable.

This is not to say that McDonalds efforts at offering affordable products were not successful. Walk-ins at the 38 McDonalds restaurants now average 4,000 people per outlet per day, and growth in terms of outlet transactions has been on a consecutive upswing growing 15 per cent year-on-year over the last four years though the company is yet to achieve break-even.

But while its efforts have worked in getting walk-ins and high trials from first-time customers, it is trying to move away from inducing trials and wants repeat customers. Says an industry expert in India: The challenge for the company now is to convert footfalls into profitable footfalls, and a more extensive menu may well be the solution.



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