Study The Service Experience Rendered By McDonald’s To Its Customers (Term Paper towards the partial fulfillment of the assessment in the subject of Service Marketing) Submitted by: Submitted to: Anushree Gang Dr (Ms) Archi Mathur Roll No. 144 Faculty of Management Vth Semester NATIONAL LAW UNIVERSITY, JODHPUR Winter Session (July- November 2009) 1 PREFACE Preparing an academic project at the Post Graduation Level should serve as the very base of further practical projects likely to be taken up by the candidate during his future career. Luc de Clapiers de Vauvenargues, a French Author has very well said that Men despise great projects when they do not feel themselves capable of great successes. But it is normally seen that academic projects are a result of the candidate’s feeling that he is really capable of undertaking the proposed project. With the same conception in my mind and proper navigation of Respected Dr (Ms) Archi Mathur, I have made an honest attempt to study in detail the topic and have conducted sincere research on the topic. This project has the detailed out information regarding service experience of the customers of the Mc Donald’s. 2 AACKNOWLEDGECKNOWLEDGEMENMEN TT The ensuing pages of work are the cumulative results of extensive guidance, hard-work and unstinting support. Thus it is with depth of gratitude and humility of words that I commence to acknowledge all those people, without whom this study could not have been a reality. It is to my esteemed guide Respected Dr (Ms) Archi Mathur, National Law University, Jodhpur. I owe heartfelt thanks for her, precious and painstaking guidance during the course of my work. Her consistently affectionate behavior has been much beyond his formal department. For all these consideration I beholden to in a special measure and no words can fully convey my feeling of respect and regard to her. This project would have not been able to cover all the prospects of the topic without her guidance and help. Words are a poor substitute to express my feelings of respect and regards to my family member and especially my brother who are a beacon of inspiration, encouragement and applauded and encouraged my efforts constantly. 3 TTABLEABLE OFOF CONTENTSCONTENTS Sr. No. Particulars Page No. EXECUTIVE SUMMARY 5 OBJECTIVES 6 RESEARCH METHODOLOGY 7 1. Introduction To Service Marketing 8 2. FOOD INDUSTRY- An Overview 13 3. SERVICE EXPEREINCE- The Concept 18 4. McDONALD’s – The Organization 26 5. DATA TABULATION 35 6. DATA ANALYSIS 45 Objective I 46 Objective II 48 Objective III 50 7. CONCLUSION and RECOMMENDATION 52 Bibliography 55 ANNEXURE 57 Questionnaire for the consumers 4 EXECUTIEXECUTIVEVE SUMMARSUMMARYY Services are everywhere, whether it be travel to an exotic tourism destination, a visit to the doctor, a church service, a meal at our favorite restaurant, or a day at school. In developed economies, employment is dominated by service jobs and most new job growth comes from services. Jobs range from high-paid professionals and technicians to minimum-wage positions. Service organizations can be any size—from huge global corporations to local small businesses. Most activities by government agencies and nonprofit organizations involve services. Service sector in India accounts to approx 50%1. Service Marketing is a very dynamic discipline. Activities, benefits and satisfactions, which are offered for sale or are provided in connection with the sale of goods”- (AMA). A service can be an act or performance offered by one party to another (performances are intangible, but may involve use of physical products) or an economic activity that does not result in ownership or a process that creates benefits by facilitating a desired change in customers themselves, physical possessions, or intangible assets. Apart from the 4 P’s of marketing mix- Product, Price, Place and Promotion, service marketing involves three more extended P’s i.e. People, Process and Physical evidence. Service Experience is the best way to describe what happens to a consumer. It constitutes sum of all encounters between a customer and service provider while buying/using2 a service, feelings about such encounters immediately after the events and sometimes the recollections about the event after a period of time. The four components of the servuction model combine to create the experience for the consumer and it is the experience that creates the bundle of benefits for the consumer. McDonald’s entered India in 1996 in the month of October using the franchise route. By franchising to local people, the delivery and interpretation of what might be seen as US brand culture are automatically translated by the local people in terms of both product and service. McDonald's is a leading international fast food restaurant chain with 31,000 restaurants spread across the globe. 1 http://www.aueb.gr/users/esaopa/courses/part2.pdf 2s Rajendra Nargundkar, Service Marketing- Text and Cases, 2nd edn, McGraw Hill Companies, New Delhi 2008 5 OBJECTIOBJECTIVESVES a) To identify and analyze the various components of the service experience rendered by McDonald’s to its customer. b) To analyze the impact of service experience on customers at McDonald’s. c) To study the challenges in maintaining and improving the service experience rendered by McDonald’s. 6 RESEARCHRESEARCH METHODOLOMETHODOLOGGYY The methodology of the study included selection of sample, study/survey of library references, collation and compilation of the primary and secondary data and information obtained through structured questionnaires, open ended interview. The method of research was deductive as conclusion would be drawn after the analysis and interpretation of data collected. 7 CHCHAPTER-IAPTER-I INTRODUCTIONINTRODUCTION TOTO SSERVICEERVICE MARMARKETINGKETING 8 Services are everywhere, whether it be travel to an exotic tourism destination, a visit to the doctor, a church service, a meal at our favorite restaurant, or a day at school. The industrialized economies are also finding service sector as their major contributor to the national income. In most countries, services add more economic value than agriculture, raw materials and manufacturing combined. In developed economies, employment is dominated by service jobs and most new job growth comes from services. Service organizations can be any size—from huge global corporations to local small businesses. Most activities by government agencies and nonprofit organizations involve services. A service is the action of doing something for someone or something. It is largely intangible (i.e. not material). A product is tangible (i.e. material) since you can touch it and own it. An act or performance offered by one party to another (performances are intangible, but may involve use of physical products) .An economic activity that does not result in ownership. A process that creates benefits by facilitating a desired change in customers themselves, physical possessions, or intangible assets. A service tends to be an experience that is consumed at the point where it is purchased, and cannot be owned since it quickly perishes. For example- a person could go to a café one day and have excellent service, and then return the next day and have a poor experience. DEFINITION “Activities, benefits and satisfactions, which are offered for sale or are provided in connection with the sale of goods”.- American Marketing Association 3 (1960) “Services include all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced, and provides added value in forms (such as convenience, amusement, timeliness, comfort or health) that are essentially intangible concerns of its first purchaser”.- Quinn, Baruch and Paquette,(1987). SERVICE PRODUCT 4 3 Committee of Definitions 1960, p. 21. 4 Hoffman k. Douglas, Bateson John E.G., Marketing of Services, 2006, Cengage learning products, New Delhi 2008. 9 A product can be defined as a mix of intangibles and tangibles offered by the marketer at a price. A customer by the product by paying the price. This definition does not make a distinction between products and services. As we have been arguing in the earlier chapters, the distinctions between a product and a service are blurring, and it is difficult to find a completely tangible 'product' and a completely intangible 'service in the true sense of these earlier definitions. We may. if we wish co, all the predominantly intangible offerings 'services'. while the predominantly, tangible offerings can be term are products. The Service Product Concept The service firm has to differentiate its services from the competitors to create its own position in the minds of the customers. Differentiation gives the service its own position in the face of competition. A variation in the offering can differentiate the total service product offering. A very good model that helps understand how service differentiation can be achieved is therefore Levitt's Product concept mode. The different levels are called core benefit, basic service product, augmented product service, and potential service, illustrated in the diagram below. Figure-1 The Service Product Concept 10 CHARACTERISTICS OF SERVICES 5 a) Intangible - Service cannot have a real, physical presence as does a product. Services cannot be seen, tasted, felt, heard, or smelled before purchase. Regan (1963) introduced the idea of services being “activities, benefits or satisfactions which are offered for sale, or are provided in connection with the sale of goods”. The degree of intangibility has been proposed as a means of distinguishing between products and services (Levitt, 1981). Darby and Karni (1973) and Zeithaml (1981) highlight the fact that the degree of tangibility has implications for the ease with which consumers can evaluate services and products. Hence consumers tend to look for evidence of quality and other attributes for satisfaction. For example, motor insurance may have a certificate, but the financial service itself cannot be touched i.e. it is intangible.