Case Study: MNC Fast Food Chains Go ‘Local’

After almost a decade in India, transnational fast food retail chains like KFC, McDonald’s, Domino’s, Pizza Hut and others are re-learning marketing lessons and segmenting their product portfolio to capture Indian consumers across diverse income levels and lifestyles. The strategy is an attempt by top food retailers to tone up profit margins with a multi-layered product portfolio that addresses the aspirational need of consumers willing to splurge while meeting the basic requirement at the bottom end. Retailers have intensified the localisation of products to cater to the Indian demand of ‘your kind of place but our kind of food’ and wooing consumers to shift from the unorganised to organised outlets. Globally too, profit worries have led to food retailers moving away from a pure volume-focused strategy.

“We have learnt that while Indian consumers like our ambience, the food has to meet their local tastes. A consumer in an urban setting is as value-seeking as a consumer in a non-urban market like Ludhiana is willing to splurge. We have therefore adopted a multi-layered marketing strategy. The attempt is to have a multi-dimensional approach of meeting the needs of a Karol Bagh shopkeeper, a Tamilian diner or a Gujarati businessman while meeting the demands of a globe traveller,” said Mr.Arvind Mediratta, chief marketing officer (Indian subcontinent) of Yum! Restaurants International, which owns KFC, Pizza Hut, Taco Bell and other food chains. Companies are learning that local needs and global brand images do not necessarily function on mutually exclusive terms.

KFC has introduced a range that offers a complete meal to value-seeking Indian consumers on regular days. The company tweaks its basket to launch inspirational food products, combining it with entertainment to attract, during weekends, consumers who are willing to splurge. Pizza Hut, for instance, has beefed up its delivery model by customising offerings to replace home meals and offering international, Indian fusion and value-meal products to target various consumer requirements.

Similarly, in line with global trends, McDonald’s is addressing the need to tone up profit margins by moving away from focusing only on the value-meal segment and offering products to health-conscious consumers. The outlet today offers Indianised products like the paneer salsa wrap or a McAloo Tikki. The focus is on having a high margin portfolio, at the same time, chasing volumes with another range of products.

Company officials said it was crucial that the brand addressed various consumer needs and is not seen merely as a children’s brand. Apart from offering the HappyMeal for children, the brand is changing strategies to accommodate wider consumer requirements. McDonald’s low prices and taste factors have been its main attractions while KFC’s unique selling proposition (USP) has been its specialty chicken fare. Food retailers say they protect the brand’s global ethos by ensuring that 60% of the offerings are international while 40% is tweaked to meet local tastes.

About Abey Francis

Abey Francis is the founder of MBAKnol - A Blog about Management Theories and Practices - and he's always happy to share his passion for innovative management practices. You can found him on Google+ and Facebook. If you’d like to reach him, send him an email to: [email protected]

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