MGT675-Management of Innovation and Creativity
Product Positioning and Competition: The Fast Food Industry and the Role Globalization plays on Cuisine for McDonald’s Veronica Ceasar
July 29, 2010
Mark D. Cox
Product Positioning and Competition: The Fast Food Industry and the Role Globalization plays on Cuisine for McDonald’s
When society thinks about the local McDonald’s, they probably do not think “innovation’. That is because everyone has become accustomed to the many novelties that McDonald’s has introduced over the years. Some people do not even know that McDonald’s was the leader in innovation being the first major international fast food restaurant, with the first drive-through window. What many people do not realize is that McDonald’s continues to drive innovation in fast food. Some times the innovation is well advertised, but other times they are designed so that customers will never even notice (Ritzer, 2004). This paper examines the effects that optimal product positioning strategies have on innovation and creativity for retail outlet locations in the fast food industry. The global fast food powerhouse McDonald’s has been the biggest marketer of fast food since 2004, with over 31,000 restaurants in 120 countries, brining in 47 million customers per day (Ritzer, 2004). The relationship between profits and product differentiation reveals that McDonald’s is better than most fast food chains at competing locally and globally in large market areas. Ritzer defined this as McDonaldization which is a process by which the principles of fast food restaurants is to dominate more and more sectors of American society as well as the rest of the world (Ritzer, 2004).
In large markets such as India with limited competition, McDonald’s had the challenge of addressing flavor immigration through global cuisine. For McDonald’s converting was going to involve various forms of selection and different taste buds, delivery as well as compatibility. A fast food chain such as McDonald’s may market a general menu but in countries like India this chain still needed to select cuisines that could be integrated into its mainstream products without confusing brand equity if it planed to be successful (Murphy, 2008). The common menu for McDonald’s consisted of chicken nuggets, fillet-o-fish, fries, sodas, and shakes (Hanacek, 2007). However, moving into the India market meant that McDonald’s was going to have to create garlic free sauces to get in “hard core” vegetarian customers, re-formulate its own products using spices favored by Indians, eggless sandwich sauces, soft serves, milk free shakes, as well as the freshest chicken, fish and vegetable products that Indians are accustomed to (Hanacek, 2007). Unfortunately, product adaptation brought with it its challenges for McDonald’s. When McDonald’s began developing its menu in 1998 it found that based on consumer feedback and research findings a wider product range was going to be needed in India because a majority of the population did not want them to entirely localize their menu (Ritzer, 2004). Based on research findings McDonald’s was also going to need more hot foods, lower entry level prices, and vegetarian pizza (Ritzer, 2004). Thus McDonald’s management and executive team began right away devising a plan to cultivate their understood of the importance of Indian culture into their own company culture since McDonald’s idea of fast food service was completely different from that of Indian customs and beliefs. McDonald’s first step towards success and uniqueness was its commitment to source all of its products from within the country (Ritzer, 2004). For this purpose, it developed local Indian businesses, which supplied it with the highest quality products required for their Indian operations. In addition, this allowed India McDonald’s to also service its customers with the foods its customers are accustomed to. McDonald’s...