Acknowledgement and non-acceptance from Indian consumers. This happened

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.

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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.