Kritika gupta pgp30030 sec_b_final

STUDY OF BRAND

PARENT BRAND

Good Neighbor

•  Keeps families together

through Ronald

McDonald House

Charities

•  Uses less energy

•  Recycles more

Good Food •  Promotes choices •  Real ingredients •  Great taste •  Transparency

Good People

•  Creates opportunity

•  Encourages diversity

•  Facilitates teamwork

•  Rewards achievement

McDonald’s Core Values

McDonald's

Breakfast Dessert

Burgers and wraps

Munchies

BRAND EXTENSION

•  Internationally, McCafés are housed within McDonald’s outlets but have a separate look and feel. These stores are more bold and sophisticated as compared to the McDonald’s outlets

•  The same format is being followed in India, where a McCafé store typically occupies 500 sq. ft. of a 4,000 sq. ft. McDonald’s outlet

•  Presently McCafé has 27 outlets in India in major cities like Mumbai, Pune, Nasik and Ahmedabad

•  It plans to expand aggressively and open close to 250 stores in the next 3-5 years

•  McCafé is able to tap the advantage of McDonald’s excellent store network and supply chain

HIGH QUALITY, INEXPENSIVE COFEE

TARGET SEGMENT: more diverse segment of the population that favors convenience, speed and lower prices.

INDUSTRY OVERVEW

Organized Café Market in India

Café Food Café Beverages

GROWTH OF ORGANIZED CAF´E MARKET IN INDIA •  The café market (organized sector) grew at a CAGR of 8.24% in the last 5 years

•  Within this market, the food segment, experienced a growth of 8.06% while the beverages segment grew at a rate of 8.71%

•  However, the proportion of food in relation to beverages has declined over the years

Café Coffee Day (1.3%)

Coffee Day Xpress (0.2%)

Costa Coffee (0.1%)

Barista Coffee Co (0.1%)

Others (98.3%)

Café Coffee Day (1.3%)

Coffee Day Xpress (0.2%)

Costa Coffee (0.1%)

Barista Coffee Co (0.1%)

Others (98.3%)

2013: Market size INR 17.6 Bn 2014: Market size INR 19.2 Bn

Key observations: •  Stand alone cafés and the unorganized sector constitutes majority of the market for

cafés and bars in India ~98% •  In the organized sector, Café Coffee Day, Barista and Costa Coffee together comprise

1.6% •  Starbucks and McCafé are relatively new to the Indian market and occupy a very small

part of the market. With their rapid expansion, however, they are slowly capturing the market with their USP – “Affordable luxury”

Market share

MARKET SEGMENTATION

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McCafé has chosen to target urban cities in well-established countries such as Australia, the US, Japan, China, Spain, India etc.

Geographic segmentation

•  Demographically, McCafé considers young adults with relatively high disposable income (annual income above 5,00,000) and adults in the working population.

•  These consumers look for a laid-back environment with comfortable surroundings, exquisite furnishings, and an artistic ambiance in a coffee house.

•  The TG is aged 25-39. Many within this group have young families. McCafé are designed to offer them a place to meet friends and enjoy a quality coffee experience as well as keep the children fed and entertained

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Behavioural

Psychographic

Occasions Regular

Benefits Speed & Quality

User Rate Light to medium

Loyalty status

Low to Medium

Lifestyle People with a hectic schedule, looking for convenient options

Personality People who are not very brand conscious

PRODUCT McCafé offers a wide range of café products – Coffee, frappé, iced drinks, pastries and sweets, cookies, cakes etc. Their offering range is at par with other cafés in the consideration set (Starbucks, Costa, Barista etc.). The product is high on quality and taste.

4 Ps of Marketing - McCafé

The following range of products is offered at a McCafé outlet •  Classic coffee •  Frappé •  Iced coffee •  Iced Tea •  Smoothies

PLACE McCafé, internationally and in India are housed within a McDonald’s outlet, where a separate area is demarcated for the Café. Because of this, it is able to make use of McDonald’s established network. However, even within the traditional McDonalds store, McCafé offers a café style environment. The company aims to open at least 1 McCafé outlet within a radius of 2 kms.


Map of Mumbai


PRICE

McCafé offers ‘value for money’ coffee without compromising on the quality front. It is priced 15-20% below its competitors.


Category McCafé (INR) Starbucks (INR)

Classic coffee 135 185

Frappé 145 185

Ice coffee 115 150

Ice tea 105 170

Smoothies 180 250

PRODUCT OFFERING COMPARISON

4 Ps of Marketing - McCafé 4 Ps of Marketing - McCafé

PROMOTION McCafé is yet to promote itself more in India. Globally it promotes the brand through coupons, premiums, advertisements on billboards and television Example-

‘McCafé Social Hour – Buy 1 Get 1 Coffee Free between 3-5 pm’

McCafé Television Commercial

The ad emphasizes on how McCafé has strived to provide the best coffee for it’s customers. It reinforces its concern for its customers and the quality of its offerings. (play the ad by clicking on the arrow)

McCafé: Morning Person Challenge

McCafé in order to promote it’s coffee, created this challenge where it invited a few people who hated getting up early in the morning. It made these people stay together in a hotel. Next morning, they were woken up at 6 a.m. and were taken to a McCafé outlet where they were served with coffee. While they kept cribbing on the way to McCafé, they noticed a sudden change in their moods after consuming breakfast with McCafé coffee.

BRAND POSITIONING

Value Proposition

Intimate connections

Comfortable environment No pretense

Daily chit-chats

Informal set-up

Cup of coffee with a book

“VALUE FOR MONEY COFFEE”

BFFs

Writers & Artists

Father, mother, children

Professionals

Older couples

Study groups

Siblings

Value Proposition

“THE INTER-WOVEN EXPERIENCE”

Conversations linger on after a McDonald’s meal at McCafé

Value Proposition

Competitive Frame of Reference

Hot Beverages

Tea Coffee

POP POD

Self - service

Family friendly – The same restaurant has food (McDonalds) and coffee (McCafé)

Modest environment

Value for money coffee

High quality trained staff

Menu: Freshly brewed coffee, smoothies, cakes etc

Café style environment

Points of Parity & Points of Difference

Perceptual Map

Premium (Status symbol)

Mass (Convenience & functionality)

Established (Many outlets)

Emerging (Few outlets)

Starbucks vs McCafé Target Group •  Almost half of Starbucks' total business comes from its

primary market target if men and women ages 25-40. •  These professionals tend to be professional urbanites

with high incomes who are interested in socially responsible and environmentally friendly policies

•  They consider Starbucks logo as status symbol and want to be associated with it

McCafé's target group appears to overlap with Starbucks' to some extent: those interested in the specialty coffee market, but at a more affordable price - so perhaps not as high quality.

Advantage Starbucks has over McCafé •  First mover’s advantage: Since McCafe entered

the market after Starbucks, will will need to offer something compelling to attract Starbuck’s loyal customer base

•  People who prefer super premium coffee and see Starbucks as a status symbol are not a part of McCafe’s TG

Advantage McCafé has over Starbucks •  The well established McDonald’s brand:

When the brand is well known, the possibility of a brand extension being successful is high

•  Affordable premium coffee •  Food options at McDonald’s

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The Brand Resonance Model

The model

Resonance

Judgment

Performance Imagery

Salience

Feelings

4. Relationship: What about you and me?

3. Response: What about you?

2. Meaning: What are you?

1. Identity: Who are you?

#1 The target group is well aware of the parent brand ‘McDonald’s which fares high on Top-of-Mind Awareness (TOMA). McCafé on the other hand is yet to gain awareness because of existence of outlets in very few cities, shorter brand history and lack of promotions and advertising (in the Indian context)

SALIENCE

#2 McCafé fares very well on this parameter. The range of products offered is at par with other coffee houses. The product is basic coffee (with variants), that is high on quality and taste. McCafé offers quick and effective self-service. The offerings are more economical and are around 20% lesser than peers

PERFORMANCE

#3 IMAGERY McCafé is perceived as a “convenient, reliable, ready-to-go” brand. It performs well when the experience of having a coffee is not as important as the functional benefit

#4 JUDGEMENT

#5 FEELINGS McCafé arouses the following feelings among the TG: •  No warmth (weak and distant customer

relationship) •  Security (trust in quality of offerings)

Being a relatively new player, McCafé lacks the perception of authenticity in the market. It has a lot of equity building to do to.

#6 RESONANCE McCafé is far from this stage of brand loyalty. It can build resonance through loyalty programmes and community engagement. It will have to pass through the previous 5 stages of the Brand Resonance Model to reach this stage where people can completely identify with the brand

SUMMARY Parent brand –

McDonald’s Brand extension -

McCafé Offering: specialty coffee market, but at a more

affordable price

Target Group: More diverse segment of the population that favors convenience, speed and lower prices. (for full market segmentation, refer to slides

12-14)

Product: Specialty coffee Price: semi-premium

Place: Housed within a McDonald’s

Promotion: TV ads, challenges, schemes

Industry scenario:

Organized café growing at

8.24% CAGR, beverages

growing faster than food

Brand Resonance: The brand needs to achieve Salience

(awareness and

Value proposition: No pretense, bonding over a cup of coffee.

The McDonald’s experience lingers on

to McCafé.

POP: Menu offerings, quality service, trained

staff POD: Value for money

coffee, modest environment, family

friendly

References •  Euromonitor: GMID database •  McDonald’s annual reports

http://www.aboutmcdonalds.com/mcd/investors/annual_reports.html •  Business Standard -

http://www.business-standard.com/article/companies/mcdonalds-to-open-100-outlets-of-mccafe-in-india-115042000958_1.html

•  The Times of Indiahttp://timesofindia.indiatimes.com/business/india-business/Beverage-boost-McDonalds-to-roll-out-McCafs-in-India/articleshow/23850835.cms

•  First Posthttp://www.firstpost.com/business/starbucks-watch-out-mccafe-is-coming-for-you-with-cheaper-coffee-1163753.html

•  VCC Circlehttp://www.vccircle.com/news/food-agri/2013/10/09/mcdonald’s-forays-coffee-shop-market-india-through-mccafe

•  http://businesscasestudies.co.uk/mcdonalds-restaurants/staying-ahead-in-a-competitive-environment/the-mccaf-concept.html#axzz3fT6WMS8T

•  http://www.huffingtonpost.com/ladan-rafii/the-starbucks-or-mccafe-c_b_4262104.html?ir=India&adsSiteOverride=in

The project is a part of Brand Management course.

It has been completed under the guidance of Prof. Sameer Mathur

Indian Institute of Management Lucknow: Marketing Professor 2013- McGill: Marketing Professor (2009-13) Carnegie Mellon: Ph.D. and M.S. (Marketing) 2003-09

Thank You