Agriculture 1990s and the following entry of new

 

Agriculture Output Marketing: Marketing of Fast Food in India

By Harsh Sunil Upadhyay

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Under the guidance of Dr. Shubhangi Salokhe
 
Submitted by Harsh Sunil Upadhyay | Symbiosis Institute of International Business, MBA- Agribusiness (2016-18)

 

Acknowledgement

 

Firstly, I would like to thank to thank God for giving me the mental and physical strength and health to complete this project. I would like to thank my family for their constant support and guidance which helped me to stay motivated, confident and calm during times of distress.

I would like to express my sincere gratitude to my faculty mentor Dr. Shubhangi Salokhe, Professor- Agribusiness department, for her constant guidance and inputs. I would further like to thank my faculty members and my friends who took out time to share their valuable feedback.

Lastly, I would like to thank each and everyone who have played a role in helping me complete this project.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Introduction

Food diversity in India is an implicit characteristic of India’s diversified culture consisting of different regions and states within. Conventionally, Indians like to have home-cooked meals. This concept supported religiously as well as individually. However, with times there is a slight shift in food consumption patterns among urban Indian families due to increasing awareness and influence of western culture.

It started with just eating outside casually and went on to welcoming a wide variety of delicacies from all over the world.

Liberalization of the Indian economy in the early 1990s and the following entry of new players has played a significant change in lifestyles and the food preferences of Indians.

After the multinational fast food players adapted the basic Indian food requirements viz. vegetarian meals and selected non-vegetarian options excluding beef and pork totally from their menu, fast food gained acceptance of Indian palate.

Multinational fast food outlets initially faced protests and non-acceptance from

Indian consumers.

This happened due to primary perception that these fast food players serve do not serve vegetarian meals and server only chicken. In addition, fast food is perceived expensive besides being out-of-way meals in Indian culture.

Today, fast food industry is growing in India as they are adapting to Indian food requirements. It is gaining acceptance predominantly from Indian youth and younger generations as it is becoming part of their routine life.

Fast food is a very fast growing industry in world as well as in India especially in

urban areas (small and large cities).

 

Fast food industry in India

 

According to worldwatch.org, India’s fast-food industry is growing by 40 percent a year and supposed to generate over a billion dollars in sales in 2005 as per their estimates. Before the entry of multinational fast food outlets, Nirula’s was a popular domestic fast food provider for eating-out. Nirula’s started with ice-cream parlours and later moved on the range of fast food including burgers, pizzas, sandwiches etc.

Established in 1934, Nirula’s today is a diversified group having a chain of Elegant

Business Hotels, Waiter Service Restaurants, Family Style Restaurants, Ice Cream

Parlours, Pastry Shops and Food Processing Plants in India. The chain with over 60

outlets operating in five states successfully caters to the Indian palate of over 50,000 guest everyday for over 70 years.

Wimpy was another fast food provider besides Nirula’s in Indian market. Wimpy

was the only multinational fast food outlet in India before 1990s with one outlet in New Delhi. In the initial years of its operations, Wimpy used to be visited by foreigners in India. Indians were occasional visitors. Today Wimpy has 8 outlets in the capital city New Delhi and it is expanding its menu with Indian dishes with a view to attract Indian consumer.

After the liberalization policy that came in force in 1991, fast food industry grown in India as multinational fast food providers have set up their business either jointly with Indian partners or independently. McDonald’s signed two joint ventures – one with Amit Jatia and another one with Vikram Bakshi in April 1995. The first outlet was opened in New Delhi. It has 50 outlets in North India and 76 in total all over India. It aims for 100 outlets by the end of 2006. In 1995, Kentucky Fried Chicken (KFC) also entered the Indian market and opened its first outlet in Delhi. In 1996, Domino’s set up base in India by entering into a long-term franchisee agreement with the Bhartia Brothers who had businesses in chemicals and fertilizers. By 2000, Domino’s had presence in all the major cities and

towns in India. Domino’s had grown from one outlet in 1995 to 101 outlets in April 2001. Pizza Hut entered India in June 1996 with its first outlet in Bangalore. Initially, the company operated company-owned outlets and then moved on the franchisee owned restaurants. McDonald’s, Domino’s, Pizza Hut and Nirula’s are the most popular and frequently visited fast food outlets. KFC has limited outlets and has faced number of problems since entry in India. Besides these, there are Pizza Express and Pizza Corner of which are not so popular. With changing life style and aggressive marketing by fast food outlets, fast food is also becoming popular in small towns; therefore, success of existing fast food outlets and entry of more is inevitable (Gupta, 2003).

 

 

 

Fast food and consumption patterns

 

According to the findings of the recent online survey from AC Nielson, India being at the seventh place, is among the top ten markets for weekly fast food consumption among the countries of Asia-Pacific region. Over 70 per cent of urban Indians consume food from take-away restaurants once a month or more frequently. Survey indicates that Pizza Hut is the most preferred fast food outlet in India. Identifying the drivers for preference of one-brand over another, the survey results indicate that Indians (66 per cent) are amongst the consumers who consider hygiene and cleanliness their most important criterion for selection. A total of 24 per cent of Indians use the quality of service as a decision making criterion to purchase a fast food brand’s offering and 22 per cent rely on their perception of whether a take-away brand offers them healthy food options.

In Indian context, there is high concern towards health in twenty-first century.

There are health related articles in daily newspapers, and health shows on television.

There are special health related magazines that are now very popular. Health related articles do mention to consume more fruits, vegetables, water and to consume less or nil of junk food including fast food being high on fat and calories. Recent news article by Barker (2006) indicates that Indians are facing the problem of obesity and among kinds of food – fast food is one of the reasons for the same. However, there is gap of a particular research in Indian context to have a link between the health problems and fast food consumption. In future, genetically modified food may take the place of fast food of today.

 

 

Marketing strategy is a big part of fast food success. Fast food chains have branches almost everywhere because, this is part of their marketing strategy. High Visibility along with global recognition is the most significant and prevalent theme of fast food chains. According to a New York Times article, there are about three new Mc Donald’s Opening every day. The main goal is to increase their outreach by not having any person more than four minutes away from a branch. Just as Mc Donald’s follows this marketing strategy, even other fast food chains does so. The competitor must be able to keep up to be able to complete with the biggest name in the industry, and hence, when new Mc Donald’s opens nearby, a competitor is also opening in the same area.

 

Objectives

 To understand the growth of fast food industry in India.

 To take a look and study the fast food market store and market share in India

To understand the developing marketing strategies in fast food industry in India

 

Methodology

The paper has been written by using secondary data collected from articles, books, journals, newspapers, reports, working papers and websites.

Also information has been referred from annual reports of various fast foods organizations.

 

 

 

Findings

Growth of the fast food Industry in India

India that is extremely conservative about its food is expressively fond of home cooked and fresh food. This trend is slowly shattering due to the globalization of India and increase of new markets. With number of people eating out increasing, the industry has major opportunities to offer to the players to capture a larger consumer base. In 1996 the international food players like McDonalds, Dominos, Pizza Hut and KFC entered Indian market and at the moment they are investing huge amount of money to seize a share of this extremely profitable market present in India. CRISIL reported that conventionally, the Indian consumers have preferred eating road side foods such as Dhabas and stalls which till date occupies a major share of the unorganized sector; where fast food has been eaten traditionally. However, domestic players like Jumboking, Kaati zone, Fasso’s are growing quickly with the changes in the economy and help of modern employment, in 2001. Jumboking is one of the fastest and biggest growing food chain in local fast food in India. The industry is currently having more than 75 stores across 12 regions in the country. The analysis predict that in 2020 their stores might increase to 200. Indian fast food market is growing at the rate of 40% per annually (CRISIL). India’s QSR business is expected to double in three years from Rs34billion in the 2012-13 to about Rs70billion in 2015-16. The analysists predict that in 2017 their QSR business will increased into Rs172billion in tier-1, tier-11 cities in India.

 

 

 

Present scenario in India

Market stores in India

 

 

The table-1 shows that in 2006 Dominos had 128 stores in India to market their produce. In 2010 it increased to 362 stores and in 2014 it increased further to772 stores. In contrast with previous year number of store of dominos has increased in ten years. Similarly McDonald’s market store has increased to 500 in 2015. Same is the case for KFC India’s market store which has increased significantly 372 in 2015. Therefore from the table it is quite evident that Dominos is the leading fast food market store in India.

 

 

 

Market Share of fast food in India

 

The above table -2 shows that in 2001 Dominos had market share of 4.5% in India. In 2005 it was 5.2%, 2009 it was 9.3% of market share. In 2013 contrast of market share of dominos has increased in twelve years. Even Mc Donald’s market share is quite constant from 2001 to 2013. Similarly KFC India’s market share has increased quite a lot to 12.2%. Therefore from the table it is clear that Dominos remains the leading fast food chain in India.

The above table-3 shows the Indian fast food market size has seen the constant growth from 2010 – 2014 that is 29.78% to 35.18%. It decreased to 26.02% in 2015. The year 2014 has shown the highest market growth rate in India. Furthermore fast food and food industry is highly competitive and conquered by large companies.

 

Marketing strategies that have emerged in fast food industry

Indians have embraced fast food as it fits well with the busy pace of everyday life, and also as it looks and tastes good. In order to keep its foothold in the front line of modern culture, the $2bn a year fast food industry also uses a variety of marketing strategies. Marketing is constantly evolving, but there are various emerging strategies the industry uses to sell fast food.

 

Visibility & Volume

The India is that the consumers don’t have to hunt for fast food as it’s everywhere. Fast food restaurants are made so as they often appear in clusters, but individual chains also tend open multiple restaurants within short distances.

Although it might come across as over-saturation, but it is the basic element of fast food marketing. A continuous stretch of highly visible logos and brand names has become part of the setting where people work, live, and play in their day to day lives. The nonstop access to fast food strengthens brand recognition and highlights the convenience and ease that are trademarks of the industry.

 

Marketing Strategies to attract Kids & Teenagers

It is estimated that the fast food industry spends about $10 billion annually on marketing products directly to their target segment which mostly comprises of kid and teenagers. Advertisements for kids’ meals feature film starts, cartoon characters giving out toys and characters that are in the current fad in order to attract kids.

In order to engage children, websites offers kids’ clubs with stories, games and contests which in turn exposes them to brand names and logos.

The fast food industry targets young teens by using product placement in various movies, shows, video games and music videos.

Another major wayof marketing is to send out text messages with coupons for free products, and Webbased rewards programs that offer free merchandise and meals. According to Eric Schlosser, author of “Fast Food Nation,” the goal is to initiate and develop a customer relationship with kids and teens that will last through adulthood.

Affordability & Value

Fast food marketing responds to the needs and moods of customers, and highlighting value and affordability has always been a vital part of the industry’s overall strategy, product qualities have become even more significant in a close-fitting economy.

Free samples, value menus that feature items for $1 and special monthly deals are all marketing tools aimed at consumers. Two-for-one coupons, combination meals with free drinks or side orders and senior discounts also bring in customers to whom cost is a concern.  Affordable prices have become a strong marketing tool.

 

Social Responsibility Marketing

One aspect where the fast food industry has been constantly criticized is that menus offer processed foods that are high in fat, and packaging that generate tons of waste.

The industry has responded with advertisements featuring whole foods purchased from domestic farmers, and fresh, lowcalorie menu options geared toward health-conscious consumers.

Some companies in order to highlight reductions in packaging and the use of recycled materials have also developed green advertising. The fast food companies have potrayed themselves as socially responsible businesses that share the public’s worry about health and the environment through marketing.

Social responsibility marketing is aimed at consumers who try to make purchases that reflect their values

 

Conclusion

Fast food industry is one of the biggest emerging markets in India. Fast food industry has managed to become so successful due to emerging marketing strategies in India.

It is often observed that when something is unique and stands apart from other things, and this in order will lead it to be noticed and checked. The emerging marketing strategies of fast food will undoubtedly increase the GDP by giving reputation to an Indian industry.

Indian economy will gain if Indian fast food and food sectors follow the emerging marketing strategies which has been mentioned above. Emerging marketing strategies of fast food industry provide best products of quality and best features as per the preference and demand of the target market. But on the contrary, fast food contains several ingredients can harm the health of the consumers. Hence, taking into account a long term business strategy, fast food companies must do research and development to make their recipes more healthy and filled with nutritional values. This would ensure not only the growth of fast food businesses but also safeguard its consumers from health hazards and lifestyle diseases.