Consumer Behavior Research Assignment

Consumer Behavior Research: Fast Food Expansion in India

Most fast food companies are expanding to other global markets due to high competition and reduced profits in the United States. One of the significant destinations has been the Asian countries due to their population and increasing globalization. To adapt to these new markets, fast food companies use different entry strategies to gain market share. For instance, in chapter 8, KFC and McDonald’s strategies offer different approaches to entering the Chinese Market. For KFC, it decided to alter its products and incorporate local culture in China by adding more street foods to the menu and utilizing local managers in differentiating products to meet the customer preferences in the region. As a result, the company has grown to demand a 40% market share in the fast food industry, with many restaurants across more than 650 cities in China.

Conversely, McDonald’s decided to maintain its brand and features in the franchises it opened in China, including maintaining its menu, recipe, and design of the restaurants. The intention was to provide enlightened people with the opportunity to have the American taste. As a result, the company has a 16% market share and plans to double its operations by opening more restaurants. Of these two strategies, the one adopted by KFC is the most appropriate for entering the Indian market as a leading fast food business. This is because of the need to adapt to customer preferences and culture, the rising Indian population, and the country’s growing levels of middle and high-income earners.

First, the best way to adapt to the Indian culture and customer preferences is by including some local managers to help integrate some of the famous street foods into the menu. Indian street foods are popular and attract a considerable number of customers. Introducing a new brand that only brings the American food culture will take a long period before being accepted into the market. However, capable managers and local businesses can partner with a new fast food company such as KFC to attract more customers and blend in with the locals while introducing the core foods of the new entrant. In this case, the locals provide a significant knowledge contribution regarding the local culture. For instance, there are food products that the locals cannot consume because of religious beliefs. However, respecting such a culture and collaborating with local businesses will enhance ease of entry, overcome regulatory barriers, and increase customer loyalty as they feel part of the restaurant’s philosophy (He and Cheng 1225). In this case, most clients will feel that the new company respects their beliefs and culture and their needs can be taken care of, which improves the customer base.

Secondly, the Indian market provides a vast potential customer base because of its growing population. Most cities in India are highly populated and congested. According to Das, the author reporting for Reuters indicates that out of the estimated 8 billion world population by United Nations, China and India account for a third of the total population (par.1). This translates to about 1.38 billion for India and 1.4 billion for china as indicated by the World Bank (par.1). Based on the survey by World Data, 355 of this Indian population lives in cities with a trend of people migrating to urban centers increasing by 2.1% every year due to a growth in urbanization (par.1). Therefore, such a population presents a huge market potential for fast foods, especially for the people in the cities. In the same way, KFC was able to use the adaptation to the local market needs to grow into the largest market share in profitability in china. Utilizing such a strategy in India can enhance the global expansion of restaurants and brands in India.

The rise of the middle class and market value for the fast food businesses in India provides a vast potential for a company that can adapt to the local culture. According to a survey and statistics recorded in Statista by Keelery, the fast food business has been on the rise since 2014 and was valued at 188 billion rupees by the end of 2020 (par.1). Further, the growth was forecasted to grow to 500 billion rupees by the years 2025 (Keelery par.1). These statistics show a growth of the market value which can enable most companies to thrive. In this case, the rapid growth in the recent past indicates a growing acceptance of fast-food restaurants by Indians. Keelery indicates that the factors leading to the rapid growth include an increasing disposable income, especially among the fast-growing middle-class earners, and the improved exposure to western culture and food in the country (par.1). Therefore, foreign fast food companies have enabled exposure of their delicacies. Using a mix of local and western cultures to match the needs of customers in India from various segments could increase sales and lead to higher income for the business.

In conclusion, the success of a business largely depends on customer preferences and cultural factors. In the fast food industry, incorporating local culture and people in opening a new foreign business is critical to learn how to appreciate the target market and respond to their needs effectively. In this case, the approach by KFC in the China market can be applicable in the Indian market in the global expansion campaign. This is because India’s population is high, especially in cities, and there is a growing middle-class income earner. This means more disposable income can be spent on fast food. In addition, most Indians are now exposed to some western foods and culture, which can help many people identify with a foreign franchise or company that integrates with the local community to provide both western foods and popular local street foods.

Works Cited

He, Jiaxun, and Cheng Lu Wang. “Cultural identity and consumer ethnocentrism impact on preference and purchase of domestic versus import brands: An empirical study in China.” Journal of Business Research 68.6 (2015): 1225-1233.

Keelery, Sandhya. “India: Market Value of Quick Service Chain Restaurants 2025.” Statista, 22 Dec. 2022, https://www.statista.com/statistics/675387/market-value-of-quick-service-chain-restaurants-in-india/

Person, and Krishna N. Das. “India’s Population Growth Slows as World Reaches 8 Billion.” Reuters, Thomson Reuters, 15 Nov. 2022, https://www.reuters.com/world/india/indias-population-growth-slows-world-reaches-8-billion-2022-11-15/

World Data. “Population Growth in India.” Worlddata.info, 2022, https://www.worlddata.info/asia/india/populationgrowth.php