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Kritika gupta pgp30030 sec_b_submission2

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Sameer Mathur
Sameer Mathur

McDonald's launched McCafé in India as a brand extension to tap into the growing coffee market. McCafé stores are located within McDonald's outlets but have a separate café atmosphere. Currently there are 27 McCafé stores across major Indian cities, and the plan is to expand to 250 stores in the next 3-5 years. McCafé offers coffee, tea, pastries and snacks at prices around 15-20% lower than competitors like Starbucks. The target segment is young urban professionals looking for an affordable yet high-quality coffee experience.

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STUDY OF BRAND EXTENSION Submitted by: KRITIKA GUPTA PGP 30030
PARENT BRAND: McDonald’s Core Values
Parent Brand - 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.
McCafé Commercial
Growth of organized Café 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 drinks segment grew at a rate of 8.71% • However, the proportion of food in relation to drinks has declines over the years Industry overview
Competitors – reference group
Market share 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 Segmentation - McCafé GEOGRAPHIC SEGMENTATION McCafé has chosen to target urban cities in well-established countries such as Australia, the US, Japan, China, Spain, India etc. DEMOGRAPHIC SEGMENTATION • Demographically, McCafé considers young adults with relatively high disposable income 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. • A major chunk (~40%) of the TG is female, 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
Market Segmentation – McCafé Smoothies • Target – young adults, age 18 – 34 • The person is a health conscious customer Customers are starting to value a healthy lifestyle and fast foods are becoming less attractive Interests - • Nutrition • Health conscience • Active living • Keep it moving PSYCHOGRAPHICS TARGET
4 Ps of Marketing - McCafé 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. 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.
4 Ps of Marketing - McCafé PRICE McCafé offers ‘value for money’ coffee without compromising on the quality front. It is priced 15-20% below its competitors. (Please refer to the offering comparison between McCafé and Starbucks on slide [ ]) 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’
POP POD Points of Parity & Points of Difference
Product Offering Comparison Category McCafé (INR) Starbucks (INR) Classic coffee 135 185 Frappé 145 185 Ice coffee 115 150 Ice tea 105 170 Smoothies 180 250
BRAND POSITIONING Intimate connections Comfortable environment No pretense Daily chit- chats Informal set-up Bonding over a cup of coffee Cup of coffee with a bo “VALUE FOR MONEY COFFEE”
BRAND POSITIONING BFFs Writers & Artists Father, mother, children Professionals Older couples Study groups Siblings
BRAND POSITIONING “THE INTER-WOVEN EXPERIENCE” Conversations linger on after a McDonald’s meal at McC
References • Euromonitor: GMID database • McDonald’s annual reportshttp://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
Thank you

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Kritika gupta pgp30030 sec_b_submission2

  • 1. STUDY OF BRAND EXTENSION Submitted by: KRITIKA GUPTA PGP 30030
  • 3. Parent Brand - McDonald's Breakfast Dessert Burgers and wraps Munchies
  • 4. 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.
  • 6. Growth of organized Café 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 drinks segment grew at a rate of 8.71% • However, the proportion of food in relation to drinks has declines over the years Industry overview
  • 8. Market share 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”
  • 9. Market Segmentation - McCafé GEOGRAPHIC SEGMENTATION McCafé has chosen to target urban cities in well-established countries such as Australia, the US, Japan, China, Spain, India etc. DEMOGRAPHIC SEGMENTATION • Demographically, McCafé considers young adults with relatively high disposable income 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. • A major chunk (~40%) of the TG is female, 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
  • 10. Market Segmentation – McCafé Smoothies • Target – young adults, age 18 – 34 • The person is a health conscious customer Customers are starting to value a healthy lifestyle and fast foods are becoming less attractive Interests - • Nutrition • Health conscience • Active living • Keep it moving PSYCHOGRAPHICS TARGET
  • 11. 4 Ps of Marketing - McCafé 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. 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.
  • 12. 4 Ps of Marketing - McCafé PRICE McCafé offers ‘value for money’ coffee without compromising on the quality front. It is priced 15-20% below its competitors. (Please refer to the offering comparison between McCafé and Starbucks on slide [ ]) 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’
  • 13. POP POD Points of Parity & Points of Difference
  • 14. Product Offering Comparison Category McCafé (INR) Starbucks (INR) Classic coffee 135 185 Frappé 145 185 Ice coffee 115 150 Ice tea 105 170 Smoothies 180 250
  • 15. BRAND POSITIONING Intimate connections Comfortable environment No pretense Daily chit- chats Informal set-up Bonding over a cup of coffee Cup of coffee with a bo “VALUE FOR MONEY COFFEE”
  • 16. BRAND POSITIONING BFFs Writers & Artists Father, mother, children Professionals Older couples Study groups Siblings
  • 17. BRAND POSITIONING “THE INTER-WOVEN EXPERIENCE” Conversations linger on after a McDonald’s meal at McC
  • 18. References • Euromonitor: GMID database • McDonald’s annual reportshttp://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