Wednesday, 5 November 2014

McDonalds vs Dominos

McDonald’s brand which defines itself around magic and happiness is losing that magic in India. I feel that the brand is not walking with the times and the changing Indian consumer. The brand primarily has a hamburger portfolio. Within this, they experiment and innovate but have not done anything outside the hamburgers. The young Indian consumer, who constitutes the biggest target for QSRs, have small interest span. They get bored with the same and hence brand rejuvenation becomes critical. McDonald’s has not rejuvenated brand over all these years, the look& the feel; the portfolio; the communication or the experience. The consumer is bored of the sameness.

Though young people still go to McDonalds as it is a value for money and cheaper option but even to them it is a substitute to meal and not a meal itself. Same is with families who do not prefer McDonalds as it does not offer solutions for everyone in the family.

Also, people are looking for more variety today. How often can you have a burger, especially now when you have so much more options? Also, as a family, I don’t have many options there. Not everybody likes a burger. Another important thing is huge vegetarian population who fear the same kitchen been used at McDonalds for both veg and the non-veg food. Also, with more health awareness, mothers are more sceptical of giving fries, burgers and aerated drinks to their kids as they are more classified as junk food.

McDonald’s have introduced some new products in its premium range but then the premium customer definitely will prefer some other option, why McDonalds then? The brand is about ‘Value for Money’ and ‘Economical’ meal to the consumer and is not associated with premium food experience.

Domino’s as a brand is the most experimenting and innovative in QSR category. Product Innovation and portfolio expansion remains their greatest strength. Domino’s has crafted a very special position among youngsters. They don’t find it ‘Value for Money’ but ‘aspirational’ in terms of its range. Young people do not go to Dominos because it’s the cheapest available option but because it has variety. Moreover, it’s a place where families can enjoy together. There is an option for everyone, including those who do not like pizza. Domino’s also launched the Joy Meal offer to attract the biggest influencer in the family- the kids, who many a times also initiate the need to ‘eat out’. To hit McDonald’s it does not include fries and aerated drinks as a part of box (which are classified as junk food) but the pizza and other healthier options according to mothers. Even the price was kept very low as compared to McDonalds. The distribution expansion coupled with local and customized communication made the brand more appealing to customers.

KFC which was more known for its non-vegetarian, especially chicken burgers and snack has now broken off those perceptions and established itself as a choice for everyone. I would say product innovation (including veg, non veg offers and even meal options like rice) has helped them expand their reach across. Though they currently focus on youngsters and have a very competitive pricing to appeal to them, they have a product portfolio which resonates with everyone in the family. Family can go together and have a meal at KFC and not just a snack. It is seen that women order of rice meals as the kids enjoy their chicken snacks. Clever localization helped KFC find its place in this competitive market. This is also coupled with consumer education. KFC clearly told and showed the consumers that they have a separate veg and a non-veg kitchen and neither the same utensil nor the oil is used to cook both. This instantly addressed some of the cultural issues the brand faced.

Domino’s expanded their targeted segment to the entire family but also made sure that they had something for each of them (in terms of product portfolio). McDonalds used focus strategy in their product portfolio and though they targeted the entire family, they asked them to love burgers. This may have worked initially when QSR formats were not facing a very tough competition and were relatively new options to Indians but today the consumer as a problem of plenty and have multiple options to choose from.  McDonald’s is trying to extend to premium segment with more expensive product options, but perhaps those people do not look at McDonalds for such products. Dominos on the other hand is innovating in the same price range that can appeal to its current target group and as per their willingness to spend. Same is KFC. They looked at ‘youth’ as their core TG and offered them all variety with a price range that made their offers more attractive. And family members who are ‘young at heart’ also like the place!!

The number of restaurants is also important in QSR format as this category is more convenience driven.  One would not drive down 5 Km to hunt for a restaurant but would look for closer home locations or availability in malls, marketplaces, cinema halls etc. (where they go for a larger experience/cause). The fact that Dominos has almost double the number of retail formats as compared to McDonalds or KFC also act to their advantage. They are at ‘arms length of consumer’s desire’.

Finally the business top lines and bottom lines are also a function of investment you make into your brand. KFC and Dominos have invested that money to keep their brand relevant to the evolving and changing TG. They have added freshness by playing with all the 4Ps whereas it looks as if McDonalds is a tortoise in this aspect. They have not invested in brand rejuvenation but leveraging the equity they have build in the past. However, it is to be seen if in this game the rabbits take on the tortoise or stop after few steps!!

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