A

FINAL RESEARCH REPORT

On

“IMPACT OF SENSORY MARKETNG ON CUSTOMER

PERCEPTION TOWARDS RESTAURANTS”

Submitted towards the partial fulfillment of the Award of

Master of Business Administration

SUBMITTED TO: SUBMITTED BY:

MS.ARVEEN KAUR HARSHITA SHAH

ASSISTANT PROFESSOR MBA 2nd YEAR

1860770023

DR. VIRENDRA SWARUP INSTITUTE OF PROFESSIONAL STUDIES

KIDWAI NAGAR, KANPUR

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 DECLARATION

I hereby declare that this submission is my own work. It contains no

material previously published or written by another person, nor has this

material to a substantial extent accepted for the award of any degree or

diploma of the university or other institutions of higher learning.

Harshita Shah

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 ACKNOWLEDGEMENT

I did my level best correcting my shortcomings to possible extend and I sincerely

hope that this project report will serve its purpose for the credit appraisal system.

I extend my heartiest thanks to all the persons whose willing cooperation led to
timely completion of the project.

I would like to extend my sincere gratitude to my director Prof (Dr.) Arpit Awasthi
and my head of department Ms. Shweta Agnihotri.

I would be failing in my duty if I do not mention the assistance of my project guide

Ms.Arveen Kaur, assistant professor without whose willing cooperation and
encouragement the accomplishment of this project would have been impossible.

Lastly, I would like to thank all those who have helped me directly or indirectly in
completing the present project.

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 TABLE OFCONTENTS
CHAPTER 1 INTODUCTION

INTODUCTION OF THE TOPIC

INDUSTRY PROFILE

COMPANY PROFILE

CHAPTER 2 LITERATURE REVIEW

CHAPTER 3 RESEARCH METHODOLOGY

RESEARCH PROBLEM

RESEARCH OBJECTIVES

RESEARCH DESIGN

SAMPLING TECHNIQUE

COLLECTION OF DATA

CHAPTER 4 DATA ANALYSIS AND FINDINGS

ANALYSIS OF DATA

FINDINGS

CHAPTER 5 CONCLUSION AND RECOMMENDATIONS

CONCLUSION

LIMITATIONS OF THE STUDY

SUGGESTIONS

BIBLIOGRAPHY

ANNEXURE

QUESTIONNARIE

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 CHAPTER 1

INTRODUCTION

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 INTRODUCTION

With ever increasing clutter in the advertising space as multiple brands view for
consumers’ attention simultaneously, capturing the consumers’ attention has
become more challenging than ever for marketers today. Marketers realize the
need for an alternative mechanism to capture consumer mind share in order to
enhance brand awareness.

Research shows that 99% of all marketing communication is based on what

consumers see and hear. Scientific studies have proved that as human beings, 75%
of our emotions are connected to what we smell rather than what we see and hear.
Marketing in general seems to have neglected this very important sense, given the
fact that branding is all about building emotional relationships between a product
and the consumer.

AN OVERVIEW OF THE SENSORY MARKETING APPROACH

Marketers are finding new ways to build stronger connections to their customers
and drive preference for their brands by employing scent, sound and material
textures in immersive customer experiences. Sensory marketing is an emerging
business discipline that applies analytical techniques to amalgamate the use of
sensory stimuli such as scent, sound and texture in order to develop strong brands
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that are more memorable for customers than conventional visual branding
techniques alone.

Brands develop strong memories in consumers through content and

communication cleverly packaged to appeal to our five senses. This results in
stronger bonds between consumers and brands. The table below (a result of a
survey by Brand sense) shows the importance of consumer emotions with respect
to each of the five senses and the percentage marketing spend of Fortune 500
companies with respect to each of these senses.

Of course, it’s not just music that speaks to your audience. Visual, tactile, and even
olfactory elements can transform your sales environment and make your marketing
efforts more effective. Companies that use sensory marketing tactics have
discovered that the smell of cinnamon is often associated with feelings of warmth.
In one study, adding a cinnamon scent to a cushion helped to improve the
perceived effectiveness of its heat-based therapeutic attributes.

A sensory marketing strategy simply asks modern companies to think beyond

fundamental advertising strategies that embrace sight and sound when they’re
engaging with customers. While audio branding, music, and even attractive images
are all crucial to creating a multi-sensory marketing experience, there are also other
points to consider too. For instance, the limbic system in the brain that is
responsible for processing smells is also in control of our memories and emotions.
Use the right scent as part of your sensory marketing tactics, and you could
instantly remind your customers of a moment in their childhood or help them to
recall your product the next time they notice a similar aroma in the area.

So, how do you create a marketing strategy that engages all five senses? While it
may not be right for every restaurant to become fully immersive with themed
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 aspects, one insight from this trend is that these restaurants carefully consider
sensory experiences. Engaging customers’ senses has the potential to create a
unique dining experience and can be leveraged as a branding tool to attract and
retain customers. The five senses of sight, smell, taste, touch, and sound all have an
impact on customer experience in a restaurant setting. If these factors are assessed
individually, they can be very powerful in collectively driving sales.

1. Sight
Customers generally assess a restaurant with their eyes before deciding to eat its
food. Therefore, visuals are very important in a dining environment. They
communicate your brand identity and create a desired tone. Graphics, digital
content, and food photography can increase appetite appeal. Lighting and design
elements create a visual experience and ambiance. Actually seeing food being
cooked can also create entertainment and anticipation.

Customer thoughts related to sight

 Does this restaurant look like a place for me?

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 Is it clean?
 Does the food look tasty?
 What kind of experience will this be?
 Does the seating look comfortable?
 Does it meet my need state? (i.e., looking for a social setting, romantic setting, or
quick service, etc.)

2. Smell
Aromatic cues can play a large role in enticing customers into a restaurant. The
smell of freshly baked bread or grilled meat is difficult to ignore. They also create
a signature brand scent that will imprint into the memories of your customers to
drive future behavior. Cinnamon, for instance, strategically places its ovens at the

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 front of the store and heats up additional sheets of brown sugar and cinnamon to
attract the noses of potential customers in the surrounding area. It is important to
strike a balance between pleasant and overwhelming odor, however.
Customer thoughts related to smell
 Where is that delicious smell coming from?
 That delicious smell is familiar…
 Smells fresh and tasty…I feel hungry
3. Taste
How your food tastes is obviously important, but using marketing techniques such
as sampling can give customers this sensory information before they decide on a
purchase. Trying a sample of a restaurant’s food can be highly influential since it is
an undeniable point of proof and can leave customers wanting more. Staff offering
samples need to be friendly yet not too pushy to avoid annoying potential
customers.

Customer thoughts related to taste

 I am not sure if I will like it…I will try a sample
 That sample tastes delicious…I am convinced
 This sample tastes better than I expected
4. Touch
Materials used at the table, from the feel of the table, to the comfort of the chairs,
and even the texture of the plates and cutlery can all signal a specific brand
experience. These Haptic cues offer confirmation of a particular experience, for
example a premium or an innovative feel. Take-out packaging is also a touch point
to consider tactile brand expression.

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 Customer thoughts related to touch
 These materials feel comfortable
 My utensils feel unique and premium
 My glass makes my drink feel special
5. Sound
Auditory elements are also important to consider when designing a restaurant
experience. Music choices can set the pace of the environment and influence
customer behavior. If an open kitchen is part of your strategy, sounds of cooking
will generate excitement. Bringing food to the table that makes a sound, such as
sizzling fajitas, also creates added entertainment.

Customer thoughts related to sound

 Sounds like a fun place
 The music is calming, I will eat slowly and enjoy every bite
 The sounds of the food cooking is exciting…It’s almost ready!
All of these sensory triggers have the potential to catch customers’ attention and
ultimately drive sales. Sensory experiences also link the menu to the environment,
creating a more cohesive brand. We are all sensory beings, and focusing on
speaking to each sense will create a deeper and more powerful immersive
connection.

Brief History of Sensory Marketing

The area of psychological marketing known as "sensory marketing" is an

advertising tactic intended to appeal to one or more of the five human senses of
sight, hearing, smell, taste, and touch to create an emotional association with a
specific product or brand. A successful sensory branding strategy taps into certain
beliefs, feelings, thoughts, and memories to create a brand image in a customer's
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mind. For example, if the smell of pumpkin spices in October makes you think of
Starbucks, it's no accident.

Sensory branding dates back to the 1940s when marketers began exploring the role
of sight in advertising. At the time, the main forms of visual advertising were
printed posters and billboards and research was focused on the effects of various
colors and fonts within them. As television began finding its way into virtually
every American home, advertisers began appealing to consumers’ sense of sound.
The first TV commercial featuring a catch "jingle" is believed to be an
advertisement for Colgate-Palmolive's Ajax cleanser, aired in 1948.

Noting the growing popularity of aromatherapy and its connection to color therapy,
marketers began researching the use of smell in advertising and brand promotion
during the 1970s. They found that carefully selected scents could make their
products more appealing to consumers. More recently, retailers have seen that
infusing certain scents throughout their stores could increase sales. The popularity
of multi-sensory marketing is on the rise.

How Sensory Marketing Works

As an approach that appeals to the senses instead of logic, sensory marketing

can affect people in a way that traditional mass marketing cannot. Classic mass
marketing works on the belief that people—as consumers—will behave
"rationally" when faced with purchasing decisions.

Traditional marketing assumes that consumers will systematically consider

concrete product factors like price, features, and utility. Sensory marketing, by
contrast, seeks to utilize the consumer's life experiences and feelings. These life
experiences have identifiable sensory, emotional, cognitive, and behavioral

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aspects. Sensory marketing assumes that people, as consumers, will act according
to their emotional impulses more than to their objective reasoning. In this way, an
effective sensory marketing effort can result in consumers choosing to buy a
certain product, rather than an equal but less expensive alternative.

For the Harvard Business Review in March 2015, sensory marketing pioneer
Aradhna Krishna wrote, “In the past, communications with customers were
essentially monologues—companies just ‘talked at’ consumers. Then they evolved
into dialogues, with customers providing feedback. Now they’re becoming
multidimensional conversations, with products finding their own voices and
consumers responding viscerally and subconsciously to them.”

Sensory marketing attempts to ensure lasting product success by:

 Identifying, measuring, and understanding consumers' emotions

 Identifying and capitalizing on new markets
 Ensuring first and repeated purchases (brand loyalty)

According to Iowa State University Professor Jihyun Song, consumers relate

various brands to their most memorable experiences—good and bad—with their
buying behaviors driven by "storytelling and emotion." In this manner, sensory
marketers work to create emotional ties that link the consumer to the brand.

Objectives of sensory marketing campaigns

 First, this theory sees customers as an emotional being, and therefore

argues that their decisions are more emotional and sentimental than
rational, which will lead to passionate decisions.

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  The second principle states that the customers’ emotions are responsible for
developing the purchase decision, generated by positive or negative
feelings for the product or service. At the end this will create a special link
between customer and product, termed loyalty.
 The third principle suggests the need to understand the emotions, values,
beliefs, feelings and culture of customers, in order to achieve a better
knowledge in benefit of the brand. The need exists here to develop
qualitative research methods, which are aimed above meeting the needs,
problems and expectations of customers as stated in traditional marketing.
 The fourth principle states the importance of the persuasion strategies in the
relationship between brand and customer are, and drives toward for a
specific behavior using emotional communication.
 The last principle of this theory describes how to achieve loyalty,
developing a pleasant moment with the product or service and generating a
positive impact through memorable moments of interaction with the brand.

The guidelines for sensory marketing are: Achieve to be identified from the
competition, being at the top of the consumers mind, and standing out by offering
unique experiences with the brand. Penetrate the heart, skin and veins of
consumers, in order to trace and conquer their minds by emotional experiences.
Create intense and lasting relationships with customers. These are the desires that
underlie sensory marketing framework, which are measured by an increase in
sales, the level of recruitment and the interaction between customers and products
or services. “Word of mouth” is also important as it reveals the experiences
between brand and customers, which at the end will be transformed into loyalty,
developing a sense of belonging and recognition. The goal of sensorial brands is to
discover how to relate with customers, in less expected way, to surprise them with

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the offered experience and to make them fall in love with the brand. The use of
these marketing strategies will bring to the company a more effective way to
communicated with and reach customers, because they will remember the sensorial
experience they had with the brand and will seek and come back for more.

Sensory marketing vs. traditional marketing

It is important to highlight the differences between traditional marketing and

sensory marketing, in order to understand the benefits that this new wave could
bring to any brand and how its implementation will help to capture and retain
customers.

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Traditional marketing focuses on the features and benefits in the functionality and
performance of products or services; it considers customers as rational decision
makers, who act as a response to the industrial economy. It aims to attract
customers when they are doing the product selection on the shelf, where it
generates the most emotional moment, since the product is in contact with the
customer. It also states the importance of persuading individuals during the pre-
sale and sale stages.

A fundamental theory of traditional marketing is the marketing mix, which

describes the four P’s of marketing: Product, Price, Place, and Promotion. These
are the tools that an organization has to communicate with the customer, and are
vital considerations of a successful marketing campaign.

The service industry has increased significantly over the past century; therefore,
the study of the marketing of these services is relevant to keep up with a changing
time. Services are generally defined as deeds, processes, and performances.
However, there is much overlap between the sale of goods and services. Relevant
to this study, the fast food industry, while classified as a service, has many
concrete attributes such as the food and how it is packaged. Therefore, a diversified
approach is necessary to address the unique challenge of marketing to this type of
service.

An additional consideration for the marketing of services is that they are

intangible and based on experience, rather than just the final product consumption,
as traditional marketing dictates. To achieve a successful experience for the
customer, marketing must evoke appropriative emotions, where the customer’s
senses are involved.

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To this end, marketing techniques have evolved into the practice of sensory
marketing. Sensory marketing is based on the creation of brand concept, and brand
image, building a perfect synergy between product or service and customer, and
generating a higher consumption. This kind of marketing designs strategies from
the customer perspective, which is considered more emotional than rational, and
which focuses on providing solutions and results instead of only products; it is
based on customer and company collaboration in order to create emotional value.

Sensory marketing incorporates the desire to provide and transmit holistic

experiences, and aims to create links with the customer, creating loyalty as it
focuses on the post-selling experience. This new wave of marketing is full of
sensations, and relies on different ways to transmit the message, using an effective
response to the information, brand management and communications. It proposes
the consumption or use of a product or service as the most important moment in
which a brand can influence a customer, creating a long-term relationship.

Sensory marketing looks to create positive experience through the five human
senses, making consumers fall in love before, during and after the purchase
decision; what is important is brand awareness and how this wave can help solve
new marketing challenges. The fundamental strategy of sensory marketing is to
trigger emotional depth beyond the tangible characteristics of the product, where
the brand will improve its awareness and strength

Marketing in the fast food industry

Traditional marketing of fast food restaurants focuses on selling the final product,
rather than the overall dining experience. The result is a limitation of the eating
choices to what the customer sees, rather than what he feels. How the customer

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feels will impact the eating out decision, so traditional marketing ignores a large
part of the fast-food dining experience.

Previous literature including a survey of US fast food customers indicates that

some of the factors that most influence their choices are speed of service, quality
and price. Seating capacity and ambience were notably not listed as high priorities
for frequent US customers, indicating a cultural trend of “serious eaters” more
interested in the final product than the atmosphere before and after the sale.

However, Asian cultures tend to consider eating as a more social or entertaining

experience, and this was noted in the study as South Korean customers valuing
other service dimensions such as reliability and empathy over price. Individual
attention and customer pampering were noted to be more significant than saving
time in their restaurant experience. Marketing managers in a global environment
must consider these cultural factors to target their desired customer base.

As stated through this literature review, traditional marketing strategies need to

make a change, coming from the use of visual advertising to developing more
creative and innovative marketing communications. The importance lies in
building long-term relationships between brands and customers, integrating the use
of the five human senses with multi-sensory experiences and culturally sensitive
strategies that will bring the customer closer to the brand.

How Sincere vs. Exciting Brands Play on the Senses

A product's design creates its identity. A brand's design can express trend-setting
innovation like Apple or solidify its dependable tradition like IBM. According to
marketing experts, consumers tend to subconsciously apply human-like
personalities to brands, leading to intimate and (hopefully for the brands), lasting

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loyalties. Most brands are considered to have either "sincere" or "exciting"
personalities.

"Sincere" brands like IBM, Mercedes Benz, and New York Life tend to be
perceived as conservative, established, and wholesome, while "exciting" brands
like Apple, Abercrombie and Fitch, and Ferrari are perceived as imaginative,
daring, and trend-setting. In general, consumers tend to form longer-lasting
relationships with sincere brands than with exciting brands

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Industry Overview: Restaurant

Restaurant companies are essentially retailers of prepared foods, and their

operating performance is influenced by many of the same factors that affect
traditional retail stores. For the most part, restaurants have business models that are
relatively easy to understand, and the array on the Value Line page is the same as
that of a standard industrial company. Nonetheless, there are a number of unique
factors to consider when making investment decisions regarding this large and
segmented industry.
Competition between restaurants is intense, since dining options abound. And,
while there are certainly dominant players in this industry (especially among fast-
food purveyors), no one company has the market cornered. Indeed, virtually every
restaurant location must compete not only against other publicly traded chains, but
also a wide array of small, local establishments. Competitors include everything
from delis and pizzerias to fine-dining restaurants. And, of course, it is relatively
easy to forgo prepared foods, altogether, in favor of home cooking, which is
usually a less expensive option. Thus, restaurant meals are discretionary purchases,
and the industry tends to be highly cyclical.
Sales
Top-line growth is typically generated in two ways, opening locations and boosting
same-store sales. Opening new doors is a straightforward strategy, and usually the
main driver of revenue when a company is in its early stages. As a chain grows in
size, however, it becomes increasingly difficult to capture benefits. The best, most
profitable locations are established first, and then managers must be careful not to
place restaurants too close together, lest they cannibalize each other's sales.

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Comparable-store sales, or "comps", is a valuable metric to examine when
analyzing restaurants. Comps are particularly important once a company reaches
maturity, since they become the primary driver of growth. Product innovations and
menu-price increases are two of the most common ways to increase same-store
sales. Remodeling existing locations is another way to boost guest traffic.
Furthermore, promotions and limited-time offers are widely used to attract diners.
Investors should also pay attention to trends in the dollar value of the average guest
check, as this can shed additional light on what exactly is driving sales.

Margins
Management's execution and ability to deliver a menu that appeals to a wide range
of palates go a long way toward determining a restaurant's margins. Most
companies in this industry have operating margins in the mid- to upper teens, and
net profit margins in the mid- to high-single digits. Food costs are obviously an
important line item and, at times, can fluctuate wildly. Prices for staples, such as
corn, chicken, beef and dairy, can move greatly, depending on factors like crop
yields, feed costs and other external demand factors.
Labor is another major cost for service-oriented restaurants. Typically, workers
earn modest salaries, often at or just slightly above government-mandated
minimum wages. Employees that fall into this category are usually fast-food
workers, dishwashers and bus boys. Servers, who make the lion's share of their
money through tips, are usually paid even less. Consequently, changes to federal or
state minimum-wage laws can have a noticeable impact on a restaurant's costs and
margins.
Fast Food vs. Casual Dining
Restaurants can be loosely broken down into two broad categories: fast food and
casual sit-down establishments. The same general factors discussed above dictate
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the performance of each group, but sit-down restaurants tend to be more expensive,
making them even more sensitive to consumer budgets and the health of the
economy. Fast-food restaurants, being less dependent on macroeconomic
conditions, are better defensive investment plays. In a recessionary environment,
their convenience and value make them attractive options for diners seeking
inexpensive meals or for those trading down from casual-dining establishments.
Convenience is a major part of the fast-food business model, so a vast network of
stores is essential to success. In addition to expansive hamburger chains, there are a
number of large players that focus on niches, such as sandwiches and pizza.
Fast food is responsible for most of the industry's international sales. Foreign
markets offer vast growth potential for companies willing to take on the challenge
of finding a successful formula that appeals to a wide array of customs and tastes.
A well-known brand name provides a huge leg up when expanding overseas,
which is one reason why fast-food makers dominate the international arena. The
convenience of these restaurants and their typically inoffensive menus, which
appeal to most diners, are other pluses.
Investment Considerations
Restaurant stocks have a number of attractive attributes. Their business models are
easy to understand, as are the factors that affect their performance. Most are
cyclical, so broad economic conditions often play an outsized roll in the group's
overall performance. However, fast-food retailers can sometimes provide more
shelter in a down economy. Conservative investors might find the stocks of mature
operators appealing as growth-and-income holdings. Conversely, fledgling
companies, with new or unique formats, use most of their cash flow for expansion,
and their stocks may offer attractive 3- to 5-year appreciation potential to the more
venturesome.

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Rise of the Restaurant Industry in India
Executive Summary
While India has always been a food-loving country with each region having its
own special cuisine, Indians have never been very big on eating out. But all that is
changing now. The restaurant industry in India has been growing at a rapid pace
over the last decade or so and the growth story is set to continue for the next
foreseeable future.
There were nearly 22 lakh hotel and restaurant establishments in India in 2002.
The food service or restaurant industry was worth a whopping Rs. 43,000 cores in
2010 and growing at a healthy rate of 15-20 percent annually.
The growth of the restaurant industry coincided with the growth of the great Indian
middle class, which was the byproduct of liberalization. Rapid urbanization,
growing awareness of Western lifestyles, more women joining the workforce, and
higher disposable income were some of the factors that contributed to the growth
of the restaurant industry.
But the real game changer was the entry of American fast food chain McDonalds
into India in the year 1996. Indians, who had limited exposure to American food
until then, lapped it up and gave rise to a huge upsurge in the quick service
restaurant (QSR) industry. The following years saw the establishment of many
international fast food chains such as Dominos, Pizza Hut, KFC, etc.
But the real game changer was the entry of American fast food
chain McDonalds into India in the year 1996. Indians, who had limited exposure to
American food until then, lapped it up and gave rise to a huge upsurge in the quick
service restaurant (QSR) industry. The following years saw the establishment of
many international fast food chains such as Dominos, Pizza Hut, KFC, etc.
And while the QSR industry was thriving, Indians discovered fine dining, too. The
joy of experiential eating was new to the Indian consumer, who was hitherto
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reluctant to spend copious amounts of money on dining out. But greater awareness
of global cuisines & gourmet food as well as the search for a heightened dining
experience led them to high-end restaurants. Today, the chain fine dine market in
India has around 50 players with 150-200 outlets spread across various cities and is
worth Rs. 500 crores.
Another interesting development for the restaurant industry was the rise of niche
restaurants serving specific cuisines and specialties. Niche restaurants like Oh!
Calcutta, Pind Baluchi, and Zambar made inroads into the Indian market.
As India went through another invasion – that of the mall culture – Indians were
treated to a whole new concept of eating. Food courts made their foray into India
and thanks to their quick service, value for money pricing, and casual atmosphere,
had soon captured the imagination of the Indian consumer.
The restaurant industry went through a technological revolution of sorts in the last
few years with the emergence of the online food ordering service. The trend gave
rise to many entrepreneurs who began food ordering startups like TastyKhana,
TinyOwl, and Food Panda. Ordering good food was now possible with the press of
a button and the Indian consumer couldn’t be happier.
While the restaurant industry in India faces many challenges like high taxes and
food cost inflation, it remains a major engine of growth for the country’s economy
contributing significantly to its GDP, paying crores of rupees in taxes, and
providing employment to millions of people. The future looks promising for the
Indian food service industry.
1. History of restaurant business in India
Food is a big part of the Indian culture. Whether it’s an everyday meal prepared
lovingly for the family or special celebratory culinary treats made during festivals
– food has always been something that Indians have bonded over. If there’s one
thing to know about the food culture of India, it’s the fact that it is an elaborate,
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expansive fare. Even a regular meal at home consists of various staples like
rice, chapati, daal, and curry along with accompaniments such as
pickles, chutneys,papadams, salad, and raita in a large number of households. Not
only does a typical Indian meal take long to prepare, but it is also savored over an
extended period of time.
Indians have traditionally prided themselves for eating home-cooked meals
prepared by maharajsor cooks in affluent families and women in middle and
lower-class ones, so the restaurant culture took a while to find a place in the
country.
While modern restaurants are believed to be a byproduct of the French revolution,
food services per se date back to ancient times.
Public eateries and street vendors were not an uncommon sight in ancient Rome,
whereas travelers during medieval times often ate at monasteries, taverns, inns, and
hostelries. But it was the French revolution that gave birth to restaurants as we
know them today by abolishing the monopolistic cooks' guilds. The enterprising
French chefs took advantage of the opportunity to serve a primarily middle class
customer base dishes that were prepared to order.
In India, the earliest reference of restaurants dates back to early 250 BC when
taverns or inns provided food to hungry travelers. Street vendors and small stall
owners also sold food in local markets and most Indian towns and villages.
But the modern day restaurants probably started mushrooming with the spread of
colonialism, especially with the growth of the Indian Railways and Civil Services.
As people started to travel far and wide across the country, there was a spurt in
eateries that could serve them freshly cooked food.
However, eating out for leisure remained a fairly rare phenomenon for majority of
the Indian families until the rise of the great Indian middle class post liberalization.

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As Western influences percolated down, lifestyles and food habits of Indians began
to change.
More and more young folk began to leave home to work in other cities and towns
and for them takeaways and dining out became necessary. This was accompanied
by an increase in disposable income and a general willingness to spend on the
experience of dining out.
The resulting growth of the restaurant industry was spectacular to say the least.
The industry was worth a whopping Rs. 43,000 crores in 2010 and has been
registering a healthy 15-20 percent growth annually, according to the National
Restaurant Association of India (NRAI).
A study conducted by the Federation of Hotels & Restaurant Association of India
(FH&RA) estimated that there were approximately 2.2 million or 22 lakh hotel and
restaurant establishments in India in 2002 and the hungry Indian wants more.
2. Food varieties & state wise specialties
One of the most interesting things about Indian food is that it is as varied as the
country’s culture, geography, and demography. The cooking style varies a great
deal as you travel from the North to South or the East to West.
While most restaurants box Indian cuisine into region-specific categories like
Gujarati, South Indian, Punjabi, Bengali, etc., it’s worth noting that each Indian
state has its own local specialty.
Here’s a list of some of state-wise specialties:
Bihar: Known for sattu (baked chickpea flour), Bihar’s cuisine is simple yet
wholesome. LittiChokha (wheat flour cake filled with sattu) and
meat saalan (mutton or goat curry with cubed potatoes) are two of its local
specialties along with sweetmeats like balushahi and thekua.
Delhi: The capital of India is also the birthplace of the hugely popular Mughlai
cuisine. This is the style of cooking prevalent during the Mughal era and is defined
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by the use of whole and ground spices. Some of the signature Mughlai dishes
include kebabs, koftas, pilafs, and biryani. Delhi is also famous of its street food
which includes parathas, chaats, and kulfi.
Andhra Pradesh: Spicy and tangy are two words that describe the cuisine of this
Southern Indian state. The use of tamarind and red chillies in both vegetarian and
non-vegetarian preparations is widespread. Rice is the staple food of Andhra eaten
with lentil preparations like daalor sambhar as well as curries. Pickles
and chutneys are also essential part of Andhra cuisine. Seafood is pretty common
in the coastal part of the state.
Goa: The food in Goa is deeply influenced by its Hindu culture. But centuries of
Portuguese rule and the burgeoning international tourism also influence the state’s
cuisine. Because it’s coastal, seafood forms the mainstay of Goan food, but other
meats like pork are also hugely popular in the state. The use of coconut milk and
strong, pungent spices is common to Goan cooking.
Gujarat: This is one of the few primarily vegetarian states in India. The cuisine of
this state has been made popular by the famous Gujarati thali that consists of
dishes like daal, kadhi, subzi, papad, and chaas (buttermilk) served with rice and
roti. What differentiates Gujarati dishes from others is the simultaneous use of
sweet, salty, and spicy flavors.
Jammu & Kashmir: Jammu & Kashmir has a cuisine that is distinct from the rest
of the country. It draws its influence from the ancient Hindu culture of Kashmir as
well as Central Asia, Persia, and North Indian plains. Mutton is the mainstay of
Kashmiri cooking and there’s a lot of use of yogurt and spices like cumin, fennel,
red chilli powder, and ginger.
In addition to the state-specific specialties, India is also home to a number of
fusion cuisines that have taken birth as a result of globalization. As more Indians

27
travel abroad and foreigners travel to India, a cooking style that is a blend of both
Indian and foreign cuisines has emerged.
Thanks to the growth of restaurants, now people don’t have to wait to visit a
particular state to taste its local cuisine. Most tier 1 and 2 cities in India have
specialty restaurants serving up authentic local dishes of different Indian states to
people who are missing home food or those keen to taste cuisines from different
parts of the country.
3. International players enter India and the rise of the quick service
restaurants
If there was one year that changed the restaurant landscape of India it was 1996
when the American fast food chain McDonalds entered the country. With its
colorful mascot, cheap burgers, and consistent looking and tasting French
fries, McDonalds soon had the middle class Indian eating out of its hand.
Until then, the fast moving foods in India were mostly restricted
to udupi style dosa-idli-wada fare or local chains like Delhi-based Nirula’s serving
fast foods such as pizzas and burgers. But McDonalds changed all that and set the
stage for the entry of many other fast food chains like Dominos, Pizza Hut,
and KFC.
In fact, the last two years have seen the entry of various niche fast food chains
like Burger King, Dunkin Donuts, Taco Bell, and Krispy Kreme. Even cafes
like Starbucks and Costa Coffee have set up shop in several Indian cities.
The restaurant industry in India is mainly driven by the youth aged between 15-44
years. With a population of 1.2 billion and the largest number of youth on the
planet, opportunities for the quick service restaurant industry is huge in India and
it’s this potential that foreign fast food chains have taken advantage of.
According to the NRAI, the Indian fast food market is worth $13 billion, less than
one-fifth that of China – the second largest fast food consuming market after the
28
U.S. But while China is witnessing a decline in fast food sales, the Indian market is
expected to grow.
In fact, the fast food industry in India is growing at 19 percent annually, 4 percent
faster than the Chinese fast food market, which is growing at 15 percent annually.
It’s not just that these QSR chains have set up shop in India, but they are also
tweaking their menus and making them more suitable for the Indian palate. So, you
have a McDonalds on one hand opening up 100 percent vegetarian outlets in some
parts of the country and a Pizza Hut on the other adding Indian flavors and
ingredients to their pizzas.
What has worked for the quick service restaurants and international fast food
chains in India is the shift in the eating out patterns. Because of the increase in
disposable income, dining out is no longer reserved for celebrating special
occasions. People go out to eat more and try international fast food joints as against
the older generations that were less experimental in their tastes and not very
trusting of the food quality and hygiene level maintained in restaurants.
Also, with an increasing number of young adults embracing the American style
fast food meals, India’s QSR story is still being written.
4. Fine Dining comes of age in India
The changing lifestyle, rise of the nuclear family, more women stepping out of
their traditional roles to go out and work, rapid urbanization are some of the factors
responsible for the growth of the restaurant industry in India. Added to that is the
increased exposure to international lifestyles and cuisines. More and more Indians
are demonstrating a growing appetite for a variety of cuisines ranging from
Chinese and Italian to Mexican and Middle Eastern.
Greater awareness of global cuisines combined with a larger disposable income is
leading many Indian consumers to seek experiential eating or fine dining. Fine
dining is not just about going out and eating. Fine dining is about elevating the
29
dining experience of consumers through ambience, décor, presentation of the food,
quality of service,use of gourmet ingredients, etc.
High-end or fine dining is slowly coming of age in India. While restaurants are
placing a lot of emphasis on delivering high quality food and excellent dining
experience, Indian consumers known to be quite cost conscious are willing to
spend more and more on experiential eating.
New cooking techniques like sous vide are being experimented with in the Indian
restaurant kitchen and many of them are inviting foreign chefs to give the Indian
consumer a taste of authentic global cuisine.
According to a 2013 NRAI report on food services in India as published in
hospitalitybizindia.com, the fine dining segment is growing at a healthy rate of 15
percent and depends largely on the affluent consumer. The report states further that
the chain fine dine market in India, which has around 50 players with 150-200
outlets spread across various cities, is currently worth Rs. 500 crores and estimated
to reach Rs. 1,010 crores by 2018.
Taking advantage of this growing trend, many celebrity chefs have set up their
own signature restaurants in the country. Sanjeev Kapoor of KhanaKhazana fame
owns the hugely popular Yellow Chilli restaurant chain. The restaurant serving
contemporary Indian food is doing extremely well in many cities across the
country.
Jiggs Kalra, another well-known name in the culinary circles in India, founded
the Punjab Grill chain of restaurant offering delectable North Indian cuisine before
selling his stake in early 2012. But Kalra along with his son Zorawar are back in
the business with the high end Masala Library restaurant in Mumbai and Delhi.
Masala Library is just one of the restaurants set up by the father-son duo as part of
their JV with Mumbai-based Mirah Hospitality called Massive Restaurants. They

30
have another chain of restaurants called Made in Punjab, but that’s more casual
than Masala Library.
In addition to this, the Kalras have added another restaurant to their repertoire
called Pa PaYa. Pa PaYa is a modern Asian bistro and tapas bar bringing a
hitherto lesser known cooking technique called molecular gastronomy to the Indian
food table.
Many Indian chefs based overseas are also returning to India to seize the
opportunity. They are taking the international dining experience to a whole new
level with their global menus adapted to traditional Indian flavors. One of them is
the London-based Michelin star chef Vineet Bhatia, who has opened two
contemporary Indian restaurants called Azok and Ziya in Mumbai.
It’s not just Indian, but also international chefs who recognize the huge untapped
market and have set up high end restaurants in the country. Ian Kittichai, the
famous New York chef, opened a Thai restaurant in Mumbai called Koh in August
2010. Since he imports all his ingredients, he is able to serve his diners authentic
Thai fare with a modern twist.
An interesting trend has begun and due to an increased interest in India as an
investment destination, many international fine-dining chains are waiting in the
wings to set up shop in India. The Indian consumer has a lot to look forward to in
terms of experiential cuisine in the coming years.

5. Niche restaurants make their presence felt

Another interesting development in the restaurant industry is the rise of niche
restaurants serving specific cuisines and specialties. No longer is the restaurant
business divided into North Indian and South Indian. There are many more
categories of specialty restaurants serving delicacies from Kashmir to Kerala.
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It’s simple – people want to taste good food. They want to taste different food. The
state or cuisine specific restaurants are simply meeting the demand of the new
Indian consumer who doesn’t shy away from experimenting with food that he or
she is not entirely familiar with.
Some of the popular niche restaurants in India include Oh! Calcutta, which started
out as Only Fish, and served authentic Bengali fare; Pind Baluchi offering dishes
from the Baluchistan region spanning across Pakistan, Iran, and
Afghanistan; Gajalee chain of restaurants serving Malvani-style seafood;
and Zambar serving Chettinad, Kuttanad, Malabar, Coorgi, Mangalorean, and
Madras curries and vegetables.
Even lesser known cuisines of Odisha and Nagaland are finding many takers with
Delhi’s Naga Kitchen and Bangalore’s Dalma doing roaring business.
And it isn’t just traditional and local Indian flavors that are finding favor with
diners, but also international cuisines. Up until a few years ago, the only
international cuisine that worked for the Indian palate was perhaps Chinese. Since
then, the Indian palate has grown to accommodate global cuisines.
So, we have popular London-based Hakassan restaurant serving Cantonese-style
cuisine, Las Vegas’ Le Cirque serving up authentic French and Italian dishes;
South African casual dining chain Nando’s famous for its peri-peri chicken; and
American fast food chain Taco Bell serving Mexican inspired dishes setting up
shop in India.
Besides these international chains, there are many restaurants started by Indian
entrepreneurs serving global cuisines like Thai, Japanese, Lebanese, European, and
popular American food. If it’s authentic traditional and international flavors that
the Indian consumer is after, these restaurants ensure they get what their desire.

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6. The upsurge of food courts
The National Restaurant Association of India (NRAI) in its report has predicted an
exponential growth in kiosks and food courts in India. The factors responsible for
this rapid growth, according to the NRAI, include lower rentals as compared to
restaurant space, higher return on investment, brand penetration, and new location
opportunities.
While they made their debut in the West in the 1980s and have now become an
essential part of airports, shopping malls, and evening business centers and
educational institutions abroad, food courts are still evolving in India (though
growing in popularity rapidly).
The Indian food court story is mainly being driven by the growing mall culture in
the country. In fact, food courts and malls have a symbiotic relationship wherein
food courts help the mall increase footfall and revenue by drawing customers,
while depending heavily on a steady stream of shoppers that the mall attracts to its
retail outlets.
Since many Indians with higher disposable incomes are looking to combine their
shopping experience with a quick bite, food courts are drawing consumers in large
numbers. All food courts usually have more or less the same floor plan – a
common dining area mainly indoors and on the top floor of a mall/commercial
center with kiosks and stalls by multiple F&B vendors surrounding it.
It’s not hard to understand why these food courts are gaining such widespread
popularity. One, people can enjoy a vast variety of cuisines under one roof unlike a
restaurant that typically serves a specific cuisine. Two, the prices for food items are
generally lower than what you would pay at a restaurant, so people find value for
money in them. And finally, the self-service, fast-paced, and casual atmosphere of
food courts is a big draw for people who want to make a quick eating stop and
don’t want the fuss involved in going to a restaurant.
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In addition to the serious shopper, food courts provide an economical hangout for
youngsters and a convenient getaway for office goers who want to escape for a
quick bite, a hot cup of coffee, or a sugary delight in the middle of the working
day.
Global consultancy Cushman & Wakefield, in a 2014 report on India retail,
projected the total mall supply by the end of the year in the top eight cities of the
country to reach approximately 14 million square feet (msf), which is nearly 200
percent more than the supply received in 2013.
Since food courts are an essential part of a mall and their most important tenant,
the food court growth story is set to continue. However, the industry does need to
overcome certain challenges such as heavy reliance on international brands, cafes,
and established QSR chains. What this means is that you are likely to see more of
brands like McDonalds, Pizza Hut, and Starbucks rather than smaller and lesser-
known fast food chains in the malls. Proper seating arrangement and vendor
combination to ease competition are other two big hurdles that Indian food courts
have to cross to be able to achieve long-term success.
7. Food moves from the street to online space
Rapid urbanization, higher disposable income, and all the other factors that led to
the growing culture of eating out in India are also responsible for the emergence of
a new crop of diners – the ordering-in or take-away diner. While previously there
were many caveats to ordering-in such as minimum order value, small delivery
radius, and misunderstood and misplaced orders; the growth of food delivery
aggregators like FoodPanda and Zomato has changed all that.
These aggregators, also available as apps on smartphones, have made it easier than
ever for the Indian diner to order food from his/her favorite restaurant without
worrying about whether the restaurant delivers to their location and if the person at
the other end has heard their order and/or address right.
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What’s more, there are added benefits to ordering online such as consumers can
take their time reviewing and choosing their dishes without someone breathing
down their neck, they can double-check their orders before making payment, and
they have a variety of payment options available to them ranging from the standard
cash on delivery and credit/debit card payment to online wallets like Paytm and
Mobikwik.
TastyKhana and Just Eat, which have been bought over by their biggest competitor
FoodPanda, raised $5 million and $89.1 million respectively from investors.
FoodPanda itself has raised a whopping $147.3 million, whereas new entrant
TinyOwl has managed to raise $20 million of investor money.
Meanwhile, businesses from other areas have also started to enter this lucrative
market, according to the iamwire article. JustDial, which was until now a purely
local search service, has spread its wings into the online food delivery business and
cab aggregator Ola has also entered this segment by piloting its food delivery
service called Ola Café in Mumbai, Delhi, Hyderabad, and Bengaluru in March
this year.
The Ola Café service claims to deliver food in less than 20 minutes. Users can
place orders from 12 pm to 11pm and make payment using cash or Ola Money.
Besides these food delivery aggregators, many quick service restaurants
like Domino’s, McDonalds, and Faasos have also launched their own online
ordering platforms.

8. Industry drivers, key statistics, & trends

Even though there’s a growing eating out trend in India, Indians still lag far behind
the West and even some Asian countries when it comes to dining at restaurants.
According to the National Restaurant Association of India (NRAI), Chinese eat out
60 times a month; Thai people eat out 45 times a month; and Indonesians eat out
35
15 times in a month. Indians, on the other hand, eat out about 2-4 times in a month
on an average.
Indians also spend far less money on dining at restaurants as compared to some of
their Asian counterparts. For example, people in Japan spend an average of $213
on eating out, while those in Singapore and Hong Kong spend $212 and $195
respectively. The average monthly expenditure on eating out is only $20 in India.
Clearly, Indians have a lot of catching up to do with other countries in Asia and the
West so far as eating out is concerned. But the restaurant industry has nothing to
worry about as there are many drivers of growth for this business in India. These
growth engines are both consumer as well as enterprise driven. Some of thekey
engines of growth, as listed by NRAI in its report, include:
Changing demographics: There’s a vast pool of working population in India,
which includes women. There’s an upwardly mobile middle class, which is liberal
and progressive. In addition to that, there’s a rapid increase in nuclear families and
all of these factors contribute to the growth of the restaurant industry.
Greater spending power: India’s per capita income has been increasing steadily
and this has led to an increase in the disposable income of Indians. Added to that is
the concept of double-income households which is the result of more women
joining the workforce. All this has led to an increase in the purchasing power of
Indians, which is driving the growth of the food service industry.
Increased exposure: More and more Indians are traveling abroad, which has
increased their awareness about global cuisines. Popular food and cooking shows
on television such as Master Chef have also led to greater exposure to gourmet
food.
India as a travel destination: With India projecting itself as a major tourist
destination to the world abroad, restaurants in the country have all the incentive to

36
expand their repertoire and up the level of their services to cater to a growing
international market.
Infrastructure and IT development: For the customers, this has meant an
enhanced dining experience due to factors like lower waiting time and improved
ordering, which keeps them coming back for more and drives the growth of the
industry. For restaurants, infrastructure and IT development helps them control
costs, minimize waste, maintain quality, etc. and helps them improve their bottom-
line. IT-driven business intelligence and data analysis helps them streamline their
business and improve results.
According to NRAI’s 2013 India Food Services Report as published in
hospitalitybizindia.com, the food service industry in India is worth an estimated
Rs. 247,680 crore ($48 billion) and projected to grow to Rs. 408,040 crore ($78
billion) by 2018 at a CAGR of 11 percent.
The unorganized sector, which includes the dhabas and roadside vendors,
comprises 70 percent of the market and is worth Rs. 1,72,685 crore . The organized
sector consisting of fine & casual dining restaurants, bars & lounges, quick service
restaurants or QSRs, food courts, cafes, and kiosks, holds the remaining 30 percent
share of the market. However, the organized food service industry is projected to
grow rapidly at a CAGR of 16 percent and its market value is expected to reach Rs.
145,770 crore ($28 billion) compared to the current Rs. 67,995 crore by 2018.
The restaurant industry is a major contributor the country’s economy. According to
the NRAI’s 2013 report, the food service industry contributes approximately 2.3
percent of the total GDP and is set to become a much larger contributor when
compared to other service industries over the next few years.
Besides, the industry is a significant tax contributor and employer. According to
NRAI data, the food services industry was providing direct employment to nearly 5
million people in 2010, which is five times more than the IT sector and 10 times
37
more than the hotel business. It was also contributing a whopping Rs. 1,000 crores
annually in Value Added Tax (VAT).
The future looks promising for the restaurant industry albeit some challenges such
as high food inflation, over licensing, high taxation, introduction of new taxes, and
increased competition to name a few.
But a fast maturing market that is becoming increasingly experimental with its
food, the growing ease and convenience of ordering in, the introduction of new and
interesting menus like breakfast and high tea, the widening reach of social media,
and international chains scrambling to set up shop in the country – all point to a
healthy growth for India’s food service sector over the next few years.

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 COMPANY PROFILE
A company profile is a statement that describes business essential elements. Most
of these profiles are designed as marketing material for different purposes. Given
below gives the description of major players in the branded restaurants.
MC Donald’s

INTRODUCTION
McDonald's Corporation is the world's largest chain of fast-food
restaurants.
The McDonald’s Corporation is one of the most successful global restaurant
chains around the world. They have used effective management and global
expansion strategies to enter new markets and gain a share of the foreign fast food
market. McDonald’s has achieved this enormous success, its best practices in the
global food industry, international growth trends and challenges, and various
lessons that have been learned from their expansion in foreign countries. This
shows how McDonald’s creates both customer and brand loyalty for their products
and services.
In 1937 Brothers Dick and Mac McDonald open a hot dog stand called the
Airdrome at the airport in Monrovia, California & in 1940 the brothers move the
Airdrome building to San Bernardino, California, where they open the first

39
McDonald's restaurant. Although McDonald's did not invent the hamburger or fast
food, its name has become nearly synonymous with both.
The McDonald's Golden Arches logo was introduced in 1962. It was created
by Jim Schindler to resemble new arch shaped signs on the sides of the restaurants.
He merged the two golden arches together to form the famous 'M' now recognized
throughout the world. Schindler's work was a development of the stylized 'v' logo
sketched by Fred Turner, which was conceived as a more stylish corporate symbol
than the Speedee chef character that had previously been used. The McDonald's
name was added to the logo in 1968.
McDonald's has its familiar golden arches logo; McDonald's has 31,886
restaurants worldwide serving Big Macs, Chicken McNuggets, salads and French
fries. Most restaurants offer drive-thru service and some suburban locations offer
outdoor playgrounds for children. Approximately 70% of McDonald's restaurants
are operated by independent franchisors. The number of restaurants in the U.S. has
reached saturation and most new McDonald's are now being opened in Europe,
Middle East and Asia.
In order to be a franchisee, an individual must have at least $175,000. There
is about 2,400 owner/operators system wide. McDonald's is looking to boost sales
by opening restaurants 24 hours a day. An estimated 30% of store revenue comes
from breakfast sales. The company has instituted a dollar menu which includes a
double cheeseburger in a bid to boost sales from value-oriented customers.

40
 MISSION & VISION
McDonald’s corporate mission is “to be our customers’ favorite place and way to
eat and drink.”
&
McDonald’s corporate vision is “to move with velocity to drive profitable growth
and become an even better McDonald’s serving more customers delicious food
each day around the world.”

HISTORY
The first McDonald's restaurant was located in San Bernardino, CA in 1954
and operated by two brothers Dick and Mac McDonald. Ray Kroc, a milk shake
machine salesman, thought the restaurant was great and purchased the rights from
the brothers. Kroc opened his first McDonald's restaurant in Des Plaines, IL in
1955 and preached cleanliness in restaurants. McDonald's would grow quickly as it
signed on franchisees to open restaurants around the country. McDonald's would
go public in 1965.
The Big Mac was introduced system wide in 1968 and was the brainchild of
Jim Delligatti, one of Ray Kroc's earliest franchisees, who by the late 1960s
operated a dozen stores in Pittsburgh. The Egg McMuffin was developed by owner
operator Herb Peterson in 1973.
The site of the McDonald brothers' original restaurant is now a monument.
With the expansion of McDonald's into many international markets, the company
has become a symbol of globalization and the spread of the American way of life.
Its prominence has also made it a frequent topic of public debates
about obesity, corporate ethics and consumer responsibility.
In 2007, the company had record revenues of $22.8 billion, a 9% increase
from the previous year. Net income was $2.39 billion. McDonald's sold the Boston
41
Market restaurant chain in 2007 and owns a stake in Chipotle Mexican Grill. In
2007, the Company completed the sale of its businesses in Brazil, Argentina,
Mexico, Puerto Rico, Venezuela and 13 other countries in Latin America and the
Caribbean to a developmental licensee organization. An estimated 10% of all
workers have once worked at McDonald's in their lifetime.

MCDONALD’S INDIA

McDonald's does business in more than 30,000 restaurants in 119 countries

around the world serving 47 million customers each day. In many countries around
the world it does not have a presence and its current strategy is to focus on the
markets where it does not do business. No firm date has been established for the
opening of new markets. In certain markets McDonald's have a presence but it is
not seeking franchisees and it has included instructions regarding those markets.
McDonald's sincerely appreciate the customers expressed interest in McDonald's
and their continued patronage of our restaurants.
. In India, McDonald's is a joint-venture company managed by two Indians. While
Amit Jatia, M.D. Hardcastle Restaurants Pvt. Ltd. owns and spearheads

42
McDonalds in west & south India, McDonald’s restaurants in North & East India
are owned and managed by Vikram Bakshi’s Connaught Plaza Restaurants Private
Limited. Celebrating over 12 years of leadership in food service retailing in India,
McDonald’s now has a network of over 160 restaurants across the country, with its
first restaurant launch way back in 1996. Prior to its launch, the company invested
four years to develop its unique cold chain, which has brought about a veritable
revolution in food handling, immensely benefiting the farmers at one end and
enabling customers to get the highest quality food products, absolutely fresh and at
a great value

CHALLENGES IN ENTERING INDIAN MARKETS

 Regiocentricism: Re-engineering the menu - McDonald’s has continually

adapted to the customer’s tastes, value systems, lifestyle, language and
perception. Globally McDonald’s was known for its hamburgers, beef and
pork burgers. Most Indians are barred by religion not to consume beef or
pork. To survive, the company had to be responsive to the Indian
sensitivities. So McDonald’s came up with chicken, lamb and fish burgers to
suite the Indian palate.

 The vegetarian customer – India has a huge population of vegetarians. To

cater to this customer segment, the company came up with a completely new
line of vegetarian items like McVeggie burger and McAlooTikki. The
separation of vegetarian and non-vegetarian sections is maintained
throughout the various stages.

43
INRODUCTION
Domino's Pizza, Inc. is a pizza company, which operates a network of company-
owned and franchise-owned stores in the U.S. and international markets. It
operates though the following three segments: U.S. Stores, International Franchise
and Supply Chain. The U.S. Stores segment consists primarily of franchise
operations. The International Franchise segment comprises of a network of
franchised stores. The Supply Chain segment operates regional dough
manufacturing and food supply chain centers. The company was founded by James
Monaghan and Thomas Stephen Monaghan in 1960 and is headquartered in Ann
Arbor, MI.

Mission & Vision

The Mission
 Maintaining high standards of the international chain of pizza
delivery in Mexico and provide the experience of an excellent product with
excellent customer service.

44
 Exceptional People serving the best pizza in the world.
 Sell more pizza.
 Have more fun.

The Vision
 To be the best operator Domino's Pizza system with the best talent.
 Number one in pizza.
 Number one in people.
HISTORY

In 1960, Tom Monaghan and his brother, James, took over the operation of
DomiNick's, an existing location of a small pizza restaurant chain that had been
owned by Dominick DiVarti, at 507 Cross Street (now 301 West Cross
Street) in Ypsilanti, Michigan near Eastern Michigan University The deal was
secured by a $500 down payment, and the brothers borrowed $900 to pay for the
store. The brothers planned to split the work hours evenly, but James did not want
to quit his job as a full-time postman to keep up with the demands of the new
business. Within eight months, James traded his half of the business to Tom for
the Volkswagen Beetle they used for pizza deliveries.

By 1965, Tom Monaghan had purchased two additional pizzerias; he now had a
total of three locations in the same county. Monaghan wanted the stores to share
the same branding, but the original owner forbade him from using the Dominick’s
name. One day, an employee, Jim Kennedy, returned from a pizza delivery and
suggested the name "Domino's". Monaghan immediately loved the idea and
officially renamed the business Domino's Pizza, Inc. in 1965.

45
 DOMINOS IN INDIA
Jubilant FoodWorks Limited (the Company) is a Jubilant Bhartia Group Company.
The Company was incorporated in 1995 and initiated operations in 1996. The
Company got listed on the Indian bourses in February 2010. Mr. Shyam S. Bhartia,
Mr. Hari S. Bhartia and Jubilant Consumer Pvt. Ltd. (formerly Jubilant Fresh Pvt.
Ltd.) are the Promoters of the Company. The Company & its subsidiary operates
Domino's Pizza brand with the exclusive rights for India, Nepal, Bangladesh and
Sri Lanka. The Company is market leader in the pizza segment with a network of
1,249 Domino’s Pizza restaurants across 276 cities in India (as on June 30, 2019).

The Company is the market leader in the organized pizza market in the pizza home
delivery segment in India, The Company has strengthened its portfolio by entering
into an agreement with Dunkin' Donuts Franchising LLC, for developing the
Dunkin' Donuts brand and operating restaurants in India,

Over the period since 1996, Domino's Pizza India has remained focused on
delivering great tasting Pizzas and sides, superior quality, exceptional guest care
and value for money offerings. We have endeavored to establish a reputation for
being a home delivery specialist capable of delivering pizzas within 30 minutes or
else FREE to a community of loyal consumers from all our restaurants around the
country.

Domino's vision is focused on “Exceptional people on a mission to be the best

pizza delivery company in the world!" We are committed to bringing fun,
happiness and convenience to lives of our consumers by delivering delicious pizzas
to their doorstep and our efforts are aimed at fulfilling this commitment towards a
large and ever-growing guest base.

46
Domino's constantly strives to develop products that suit the tastes of our
consumers and hence delighting them. Domino's believes strongly in the strategy
of 'Think global and act local'. Thus, time and again we have been innovating with
delicious new products such as crusts, toppings and flavors suitable to the taste
buds of Indian Consumers. Further providing value for money and affordable
products to our consumers has been an important part of our efforts. Our initiatives
such as Fun Meal and Pizza Mania have been extremely popular with consumers
looking for an affordable and value for money meal option.

Domino's believes that when a box of pizza is opened, family and friends come
together to share the pizza. Hence, our brand positioning: ‘Yeh Hai Rishton Ka
Time'

That's why, all our efforts, whether it is a new innovative and delicious product,
offering consumers value for money deals, great service, countrywide presence or
the promise to deliver in 30 minutes or free are all directed towards making
relationships stronger, warmer and more fun by giving consumers an opportunity
to get together, catch up, reunite and spend more time together.

CHALLENGES IN ENTERING INDIAN MARKETS

To woo Indian traditionalists, as well as the budget-conscious eater, the chain

spent eight months examining everything from flour to toppings, to lower prices.
It then introduced what it called “Pizza Mania”—a 35-rupee (60-cent) pizza that
takes exactly 2.5 minutes to make and six more to bake.

PICKING LOCATIONS

In small cities, where Indians crave Western products and eating out is a family
event, Domino’s offers a large dine-in space. And its locations throughout the

47
country are situated exactingly: The pizza chain studies each neighborhood, its
streets, and traffic flow. Then each store’s area is meticulously mapped, down to
every intersection and traffic light, to find the fastest delivery routes—because
here, Domino’s offers its “30 minutes or it’s free” policy. (It ended the offer in
America in 1993, after the hurry caused too many car accidents.)

DETAILING DELIVERY

A deliveryman and his manager plot out the route he’s about to take. Each
delivery is allotted eight minutes, and there’s a seven-minute buffer for traffic
jams and bad roads. More than 99% of the pizzas arrive within the promised 30-
minute deadline.

MODIFYING MENUS

The Domino’s India menu is diverse; to appeal to the country’s many tastes. For
inspiration, its chefs (right) go on regular “food walks” through markets. A
recent “Taco Indiana” dish was inspired by northern India’s kebabs and parathas,
for example. In southern India, where pizza is not as popular, research led to a
spicy raw-banana pizza.

CHOWING DOWN

Chefs taste-test a new pizza. It’s the locally popular “cheese burst” topped with
chicken salami, classic Indian spices (chili pepper, sesame, ginger, and garlic)
and some that are new to India’s middle class (chives, celery, parsley)—a
Western slice that tastes just Indian enough.

48
 Kentucky Fried Chicken, popularly known as
KFC, is a fast food restaurant chain that is known for its fried chicken.
Headquartered in Louisville, Kentucky, the United States, KFC is the world’s
second largest restaurant chain after McDonald’s.

KFC Corporation is the largest fast-food chicken operator, developer, and

franchiser in the world. KFC, a wholly owned subsidiary of PepsiCo, Inc. until late
1997, operates over 5,000 units in the United States, approximately 60 percent of
which are franchises. Internationally, KFC has more than 3,700 units, of which
two-thirds are also franchised. In addition to direct franchising and wholly owned
operations, the company participates in joint ventures, and continues investigating
alternative venues to gain market share in the increasingly competitive fast-food
market. In late 1997 the company expected to become a wholly owned subsidiary
of Tricon Global Restaurants, Inc., to be formed from the spinoff of PepsiCo's
restaurant holdings

49
KFC primarily sells chicken pieces, wraps, salads and sandwiches. While its
primary focus is fried chicken, KFC also offers a line of grilled and roasted
chicken products, side dishes and desserts. Outside the USA, KFC offers beef
based products such as hamburgers or kebabs, pork based products such as ribs
and other regional fare.[citation needed]
The company was founded as Kentucky Fried Chicken by Colonel Harland
Sanders in 1952, though the idea of KFC's fried chicken actually goes back to
1930. Although Sanders died in 1980, he remains an important part of the
company's branding and advertisements, and "Colonel Sanders" or "The Colonel"
is a metonym for the company itself. The company adopted KFC, an abbreviated
form of its name, in 1991.[4] Starting in April 2007, the company began using its
original name, Kentucky Fried Chicken, for its signage, packaging and
advertisements in the U.S. as part of a new corporate re-branding program;[5][6]
newer and remodeled restaurants will have the new logo and name while older
stores will continue to use the 1980s signage.

IT’S MISSION

“To sell food in a fast, friendly environment that appeals to pride conscious, health
minded consumers”

HISTORY
The fast-food chain known today as "KFC" began back in the ‘30s when Harland
Sanders, (born September 9, 1890) began serving chicken to the patrons of his
service station in Corbin, KY. He didn’t have a restaurant then, but served people
on his own dining table in the living quarters of his service station. Eventually the
operation grew and moved across the street to a motel and restaurant. In 1935, in

50
recognition of his contributions to the state’s cuisine Governor Ruby Laffoon made
him a Kentucky Colonel.

In 1952 Pete Harman became the first Kentucky Fried Chicken franchisee, with a
store in Salt Lake City. In 1956, at the ripe young age of 65, the Colonel sold the
Corbin, KY, location and went on the road to enlist new franchises. In 1964 he
sold the chain to a group of investors including John Y. Brown Jr. and Jack Massey
for $2 million. The Colonel continued on as spokesman for the company, which
went public in ‘69, and then was sold to Heublein Inc. in ‘71 until his death 1980.

PepsiCo, Inc. acquired the chain in ‘86, eventually changing its name and logo to
KFC in ‘91. Today, KFC has well over 9,000 locations worldwide, including
China, Russia, and Australia.

It has only been over the past few years that the company has had a kid meal
program that offered premiums. Virtually all of these have had been licensed
products, looking to Sony (Beakman’s World, Ghostbusters); Marvel Comics
(Spider-Man, Hulk, Fantastic Four, Wolverine); Disney (Timon & Pumbaa); Saban
(Masked Rider); and others (Scholastic/ Animorphs; United Media-BBC
Worldwide/Wallace & Gromit).

Unlike many of the other fast food operations, KFC tends to keep their promotions
running for longer periods of time, having only four to six promotions throughout
the course of the year. The advantage to this approach to meal premiums is twofold
with pluses for both KFC and collectors. On KFC’s side, the company incurs less
traffic, marketing, and operational expenses that are associated with acquiring and
scheduling promotions. While for collectors, the advantage is that there is more
time to acquire preferred toys.

51
Ethical issues involved in Kentucky Fried Chicken's (KFC) business
operations in India.

KFC entered India in 1995 and has been in the midst of controversy since then.
The regulatory authorities found that KFC's chickens did not adhere to the
Prevention of Food Adulteration Act, 1954. Chickens contained nearly three times
more monosodium glutamate (popularly known as MSG, a flavor enhancing
ingredient) as allowed by the Act. Since the late 1990s, KFC faced severe protests
by People for Ethical Treatment of Animals (PETA), an animal rights protection
organisation. PETA accused KFC of cruelty towards chickens and released a video
showing the ill-treatment of birds in KFC's poultry farms. However, undeterred by
the protests by PETA and other animal rights organisations, KFC planned a
massive expansion programme in India.

“While chicken has always been a large part of our menu, 2016 is the year that we
have refocused on our core, as a result all the big ticket launches so far have been
driven by chicken,” added Ribot, who took over as head of marketing nine months
ago.

It was in 2014, a decade after re-entering India, that KFC gave the country a
dedicated vegetarian menu.Over the years, most large fast-food chains have
“Indianized” their menus for religious and cultural reasons. Beef and pork were
shunned as they are not widely consumed in urban India. Besides, nearly 30% of
Indians do not consume meat at all.

So, the logic was simple: sell more to vegetarians.

52
 CHAPTER 2
LITERATURE REVIEW

53
Analysis of literature with respect to impact on consumer behavior

The research studies analyze show that consumers are heavily using their senses in
order to perceive the quality of the product and associate it with positive emotions.
The perception of different marketing stimuli consists of emotional and cognitive
processes, which take place within the consumer. According to the findings of
these studies, sensory stimuli deriving mainly from the product and the packaging
such as colors, modern style, pleasant smell, velvety texture and closure packaging
sound, influence brand perception positively leading to a stronger (rational and
emotional) bond between the brand and the consumer.

Marketers need to pay attention, apart from the “traditional means” of the
marketing mix (advertising, public relations, personal selling, sales promotion), to
other very important “sensory means”, such as product scent and texture, store
atmosphere (including store music), sounds deriving by their products. Sensory
marketing is a relative new concept, which involves the creative synergy between
marketing, psychology, neuroscience and neuropsychology. If marketers clearly
understand this new concept and try to utilize the knowledge of similar to this
study researches, then they can offer a unique buying experience to their
consumers, significantly increasing the probability of selling their products.

Sensory marketing is based on the concept that we are most likely to form,
memorize, and discover the mind when all five senses are involved. By going
outside the traditional marketing media of sight and sound, brands can establish a
stronger and longer-lasting emotional connection with consumers.

54
Krishna (2010) explained sensory marketing as “marketing that engages the
consumers’ senses and affects their behaviors”. Advertising is not what it used to
be. Even though, we are adopting more and more marketing resources
communicating with consumers. Consumers with an urge for advertisement‐free
entertainment are growing. Snappier graphics, faster editing, more appealing
confirmations or bigger and better discounts will no longer do it. Moreover, to be
perfectly frank, the most distinctive proposal is not likely to hold water, something
new is required. In the search for something new, we have to move right outside of
today’s advertising prototype. We have to go back to the basics and identify what
actually charms human beings on an ordinary, everyday basis. If there is a sound,
touch, taste, and smell element, you would probably be right in assuming that this
is merely a pleasant coincidence. One may ask why these four senses have been
neglected and left to their natural protective roles. Almost our entire understanding
of the world is experienced through our senses. Our senses are our connection to
memory and can tap right into emotion. Bringing on the five senses has worked
very well in emotionally connecting people to the rituals of faith.

Visual marketing (sight). Sight is the most used sense in marketing, as it is the
most stimulated by the environment. The choice of colors and forms in the
conception of a product, the layout of a point of sale, the realization of promotion
campaign are key factors of success (or failure), which are well understood by
marketers. Colors and shapes are the first way of identification and differentiation.
Many brands are associated to a specific color, then it is memorized more easily by
customers; Coca Cola is red, Kodak is yellow, and KFC are red and white. The
company can be identified even though the customer did not see the name.
According to memory retention studies, consumers are up to 78% more likely to
remember a message printed in color than that in black and white. In the food and

55
beverage industry, the impact of colors is obvious and sharply defined. The visual
system is to modify light patterns into information, according to which people are
capable of perceiving forms, colors, dimensions, movements, and distances
between objects. Recent years showed that the way the product looks is not the
only factor important for the consumers. Furthermore, researchers have showed
that sight is a dominant factor in creating brand awareness and in generating
customer experience.

According to Henderson, Cote, Leong, and Schmitt (2003), quoted that the use of
graphic information can make it easier for a product to stand out in the large
amount of marketing messages, having a positive impact on the customers’
consideration of a possible purchase (Kahn & Deng, 2010). Further, visual sense
has been shown to be of great significance when verbal material is absent, creating
a perception of quality which has a direct impact on the building of a strong brand
(Henderson et al., 2003). Furthermore, researches have also deduced the visualized
brands and other visual cues. It has been suggested that an unappealing product
design might result in people searching for, expecting, and detecting problems, as
well as observing details instead of ignoring small issues. A visually attractive
product design may improve creativity in problem solving, as well as having an
impact on mood (Norman, 2004). It can affect consumers in both a positive and a
negative way without processing any other information (Norman, 2004). This is
also emphasized by Messaris (1997) who argued that the sense of sight, beside the
purpose of receiving attention, can elicit an emotional response towards a product
and other things. A sight strategy stresses the meaning of such sensory expressions
as color, light, and theme, as well as graphics, exterior, and interior. All are
underlined in picturing a brand’s identity and values. The Finnish producer of
mobile phones, Nokia, illustrates just this: Nokia has chosen to design its phones

56
with soft values in mind in order to appeal to human senses. The main rationale has
been to move away from the hard values that technology conventionally stands for.
This has been a way to make the mobile phones more user-friendly by giving each
product an identity and soul. Nokia’s big screen and soft buttons have been
designed for this purpose and the ability to change the color of phone suggests
increased individualization. Sound in marketing perception. Sound can be parted
into two ways: wanted and unwanted sound, and Rossing, Moore, and Wheeler
(2002) explained that there are more to the world of sound in the environment than
music—namely noise. The authors elaborate this reasoning, and state that noise has
been said to have an impact on communication as well as produce different
psychological as well as physiological impact (Rossing et al., 2002).

Olfactory marketing (smell). Smells trigger certain parts of the brain responsible
for creating emotions and memories. The human nose can identify and remember
as many as 10,000 scents and as much as 75 percent of our emotions are generated
by what we smell. Out of all the senses, smell is the only one with a direct link to
the brain.

 As Dr. John Medina explains in his bestseller Brain Rules. The most
famous technique of olfactory marketing in the food industry is the use of
artificial smells to appeal to customers in the street, subway, or
supermarkets. The best example can be Starbucks coffee, the coffee shop.
They have started roasting coffee beans within the stores instead of
outsourcing the process. This spreads the odour of beans in the environment
thereby giving richer sensory experience. Paradoxically, there are only few
studies in this field, in comparison with researches on visuals or sonorous
stimulus. Researches on the smells started these last 15 years, especially in

57
 the United States, so many questions are still unanswered. However, the
impact of smells on customers’ behavior has been definitely certified. First,
researchers proved the positive impact of a smell on the evaluation of a
product (Laird, 1935; Cox, 1969).
 According to Spangenberg, Crowley, and Henderson (1996b), a pleasant
smell influences positively the evaluation of the customer on a point of sale
(and some of its products), the intent of walk-through, of buying, as well as
on the time spent inside (real and perceived). But the precise olfactory
characteristics that could be at the origin of these influences are not yet
determined. Hirsch and Gay (1991) had noticed that women are more
sensitive to smell than men. However, each sex does not have the reaction
faced on the same smell: for instance, men stay longer than women in a
shelf perfumed with spicy scent (Wall Street Journal, 1990), when women
are more sensitive to shampoo smelling than men. The age of the customer
modifies his perception, as according to Doty (1984; 1985), the sense of
smell breaks up as the person gets older. In this way, there is also a
difference between generations: People born before 1930 are more likely to
call up natural smells, while youngest report more food or artificial smell
(Hirsh, 1992). So the use of olfactory marketing can be interesting for a
brand, provided that it knows how its target, to avoid a bad perception and
then a negative impact.
 . A smell strategy is applied to permit a scent to become a component of a
brand’s identity and image. Scents add in creating memory pictures, a
positive atmosphere, and well-being among both customers and employees.
Eliminating unpleasant smells inside a car to make it more pleasing to get
into and use was described in an interview with the Volvo marketing
department in Gothenburg, Sweden: We put a lot of effort into making the
58
 car smell good when one enters it. The new S80 and all of our cars are
adapted for allergenic environments. The S80 is recommended by the
Swedish Asthma and Allergy Association. When the car is opened with the
hand control, the air is sucked out, as there is otherwise always an
accumulation of the smell of plastic. This indicates the development work in
this area, which is quite enormous. Smell in relation to gender. According to
Spangenberg et al. (1996a), they also noted that when “feminine scents”
were used, sales of women clothes doubled; as did men’s clothes when
masculine scents were diffused. This underscores the importance of
matching gender‐preferred scents to the product. Both men and women
browsed for longer and spent more money when a fragrance specific to their
gender was used to scent the store atmosphere. Aroma preferences tend to
be cultural and they can be generation‐specific too, so the target market at
each location will need to be pinpointed precisely

Auditory marketing (sound). Sound has the power to influence our mood and
sway our buying habits. To use sounds is known in advertising: To associate music
to a message is a good way to make the consumer remember it. However, music is
also important for sensory marketing users, since researches underlined the impact
of music on behavior, in a point of sale for instance. The effectiveness of a selling
environment depends on its capacity to manage the subjectivity of the potential
customer (Célier, 2004). When sound is directly linked to the product itself,
consumers may interpret it as a sign of quality or familiarity. “Kellogg’s TM takes
full advantage of the sound element. Its Rice Krispies TM has the classic ‘snap,
crackle, pop’, but did you know the crunch of the Kellogg’s cornflake was
carefully developed in sound labs?”. The power of music is in its capacity to
contextualize the different articles and support emotional states and poses

59
(Gumperz, 1977; DeNora, 1986). Music aims to put customer in a state of mind
corresponding to the articles that are sold: Playing rock music in a guitar shop and
the person will imagine himself playing with what could be his future purchase.
Music can then, if connected to the product, be a way to act on the buying behavior
of the customer. It is also proved that high volume music in a bar will increase the
consumption of the customers (North & Hargreaves, 1996). Studies have been
made to find what kind of music fits the best with the different kinds of places: For
instance, classical music will increase the quality sensation of a wine cellar (Areni
& Kim, 1993) or a tea house (North & Hargreaves, 1996). But music can also act
on the “crowd management”, by influencing the time spentinside by the customer.
For example, according to two studies from Roballey et al. (1985) and Milliman
(1986), fast-tempo music will push the customer.

Tactile marketing (touch). Our skin has more than 4,000,000 sensory receptors
that can be easily influenced through materials, weight, smoothness, and ease of
the product. Sense of touch also to leave earlier. On the other hand, a slow music
played at low volume will increase the time and the money spent inside. Same
studies revealed also that clients will eat faster and consume less with a loud
volume and fast-tempo music.

 Another research from Smith and Curnow (1966) revealed that in a point of
sales, customer adopts his walk speed according to the tempo of the music.
Music offers a wide range of possibility to the marketers to influence
customers’ behavior and complete the atmosphere to create a coherent sales
environment plays a great part when it comes to packaging design, or even
in some advertising campaigns. Packaging can give an enormous power on
our brand awareness. It is a flawless method for getting close to consumer’s

60
 unconsciousness, their perceptions, feelings, and tastes. The solid wish to
pick up, touch, and test things is massive, and retailers count on that in their
display strategies. Our hands are an important link between our brains and
the world. The fact is that we humans have more tactile nerve system in our
little fingers alone than we do on our entire back. In a restaurant, the weight
of the cutleries, the softness of the napkins, the comfort of a chair can affect
the perception the customers has of the atmosphere since, according to
Rieunier (2002), the touch is one of the major determinants of the well-being
sensation.
 Peck and Childers (2003b) showed how information gain through touching
influences emotion and consumer. Haptic information, or by the hands, is
important for the assessment of products that differ in terms of material
properties related to texture, hardness, temperature, and weight. The authors
develop and propose a conceptual framework to illustrate that salience of
haptic information varies significantly across products, consumers, and
situations. The authors conduct two tests to assess how these factors interact
to impair or improve the achievement and practice of touching information
or touch by hands. A touch strategy targets at consolidating the identity and
image of a brand through a physical and psychological interaction with
customers. Touching products makes it easier to recall them merely by
looking at them. IKEA in Norway illuminates a touch strategy: During the
summer of 2007, the company let its customers stay the night. The aim was
to create a touch experience of IKEA’s beds, at the same time as the actual
features of the bed were experienced during a night’s sleep. The night stay
was free, and the customers could choose between a basic dormitory, a
family room, or a marriage chamber. Atmosphere from marketing
perception. In 1970’s, Kotler claimed that the atmosphere of a place can be
61
more dominant than the product itself, highlighting that the atmospherics can
be regarded as the prime product. Store atmospherics are said to affect
customers behavior through its interaction with their perception (Puccinelli
et al., 2009) and the thought of atmospherics is to create a positive
experience that impacts the customer’s perception, permitting them to
imagine positive things, including the likelihood to try new things (Wagner
& Rudolph, 2010). Store atmospherics is defined as “an effort to design
buying environments to produce specific emotional effects in the buyer that
enhance his purchase probability” (Kotler, 1974) and concerns
environmental cues that can have a possible effect on human behavior as
well their perception (Smith & Burns, 1996). In connection to the above
stated definition by Kotler (1974), Sharma and Stafford (2000) stated that
design, ambiance, and social factors together make out atmospheric cues.
The retail environment is, therefore, never unbiased, instead it is full of cues
and various messages communicating with customers (Greenland &
McGoldrick, 1994). These cues, referred to as sensory cues are consequently
of great significance in attracting the customer, creating an emotional
relationship (Hultén, 2011). Since the store surroundings is becoming more
and more fundamental with increased attention from both customers and
store managers, the stores must be designed with different styling elements
in a conscious way with the goal to appeal customers, affecting the buyers in
different means (Turley & Milliman, 2000; Solomon, Pierrehumbert,
Matthews, Daniel, & Friedlingstein, 2010). This thinking is further
developed by Summers and Hebert (2001) who argued that atmospherics
express precise sensory qualities of a store environment that can be used to
induce clear consumer responses. The atmospherics are directly linked with
our senses, excluding taste, through which we will experience different
62
 sensory channels like color, shape, scent, volume, or temperature (Kotler,
1974). Store atmospherics are connected to amount of stimuli and different
cues, where color, scent, and music are included (Spangenberg et al., 1996b;
Wagner & Rudolph, 2010; Solomon et al., 2010), with an aim of impacting
customers in a positive way through emotional responses at an unconscious
stage (Donovan & Rossiter, 1982).

Gustative marketing (taste). People can sense five basic tastes: bitter, sour,
savory, salty, and sweet. For all other aroma tastes, we must show gratitude to our
sense of smell, for that is the one that gives flavor to our food. We can say that
taste is the sense that merges all different senses together to create a complete
brand experience, but is also related to emotional condition, so it can change mood
and brand perception. Thanks to scientific advancements, this sense is now highly
mastered and exploited by producers in order to adapt their products to regional
preferences: e.g. German consumer likes the sweet-salty mix, softly sour for the
British one (Célier, 2004). Recent studies aimed to understand better the
mechanism of taste and explore the existing relations between, for instance, taste
and colors. Thus, scientists now know that the four basic gustative sensations,
sweet, sour, bitter, and salty, are respectively linked by consumers to the red,
green, blue, and yellow colors (Célier, 2004). This might be important in the
packaging design process of a product for instance. In a promotional way,
companies often use gustative marketing to convince customers, by making blind-
tests (through comparatives advertisements for instance) or directly with sampling
or free-tasting promotional operations. According to Rieunier (2002), such
operations can be determinant in the food industry, as customers are more disposed
to purchase a product that they already tasted and liked. Impact of Senses on
Consumers It has been stated that consumers search for and buy emotional

63
experiences around what has been bought and no longer buy products and services
alone (Brembeck & Ekström, 2004; Ratneshwar & Mick, 2005). In this research,
the sensory experience is related to the five human senses, despite their importance
in generating customer value, sensory experiences, and the brand as an image. As
such, there are six main elements: sight, sound, scent, touch, atmosphere, and taste
associated with sensory marketing as discussed below. Sight and its marketing
impact. Empirical studies relating to sight impressions have been discussed by, for
instance, Orth and Malkewitz (2008). The sense of sight is the most powerful one
for detecting changes and differences in the environment and is the most used
sense in perceiving goods or services. In studying sensory, emotional, and thinking
capacity of the human brain, studies show that vision, for example, can interact
with such senses as hearing, touch, and olfaction (Calvert & Thesen, 2004).
Another study has demonstrated that various techniques identify the five senses
merging in the human brain, indicating that one sense can be affected by relations
with other senses (Driver & Noesselt, 2008)

64
 CHAPTER 3
RESEARCH METHODOLOGY

65
 STATEMENT OF RESEARCH PROBLEM

Restaurants industry is a highly competitive industry and retention or repeated

buying and customer loyalty are mostly dependent on the experience of the
customers at the restaurants.

Hence, the study is focused on the following research problems:

 Whether the sensory elements have impact on perceived quality and brand
loyalty in restaurants?
 What are the most effective sensory elements that can be used to improve
customer perception?

STATEMENT OF RESEARCH OBJECTIVE

The main objective of the research is to “study the impact of sensory marketing on
consumer perception in context of restaurant industry”.

It focuses to identify as to how sensory marketing could be used to improve

business volumes in restaurant industry through revisits and brand loyalty.

66
Research Design
Research design is defined as a framework of methods and techniques chosen by a
researcher to combine various components of research in a reasonably logical
manner so that the research problem is efficiently handled. It provides insights
about “how” to conduct research using a particular methodology. Every researcher
has a list of research questions which need to be assessed – this can be done with
research design.
Causal research design
It was basically a quantitative research. The type of research was causal.
Causal research design deals with determining cause and effect relationship. It is
typically in form of experiment. In causal research design, attempt is made to
measure impact of manipulation on independent variables (like price, products,
advertising and selling efforts or marketing strategies in general) on dependent
variables (like sales volume, profits, and brand image and brand loyalty). It has
more practical value in resolving marketing problems. We can set and test
hypotheses by conducting experiments.
Sampling Technique
A sampling technique is the name or other identification of the specific process by
which the entities of the sample have been selected.
A probability sampling method is any method of sampling that utilizes some
form of random selection. In order to have a random selection method, you
must set up some process or procedure that assures that the different units in
your population have equal probabilities of being chosen.
Systematic random sampling was used since the subjects were selected because
of their convenient accessibility and proximity.

67
Data Collection

The primary data was collected through a structured questionnaire from the
target population who dine out in multi cuisine restaurants. The respondents were
those set of people who fall in the age group of 13-60 which includes teenagers,
students and people who are in the early stage of their professional life, middle
aged people and old people who dine out in the restaurants.

68
 CHAPTER 4

DATA ANALYSIS AND FINDINGS

69
 ANALYSIS OF DATA

1. How often you go to restaurant per week?

Percentage
0-1 59.8
2 22.2
3 13.6
More than 5 6.4

70

60

50

40

30

20

10

0
0-1 2 3 more than 5

INTERPRETATION

From the above data, it can be interpreted that 59.8% respondents visit restaurants
at least one a week, 22.2 %respondents twice a week, 13.6 % thrice & 6.4% more
than that. This can imply that respondents tend to going to have a meal outside the
house at restaurant at least one time per week.
70
 2. Rate (5 – the most & 1- the least) the attributes that would come up to
your mind while choosing the restaurants
FACTORS Minimum Maximum Percentage
Taste 1 5 66.0
Service 1 5 4.2
Atmosphere 1 5 26.8
Price 1 5 2.6
Location 1 5 0.5

70

60

50

40

30

20

10

0
TASTE SERVICE ATMOSPHERE PRICE LOCATION

INTERPRETATION

This result showed that the most important factor is the taste on the dish of
restaurant which has showed in the most important rate (the most valuable in terms
of percentage). While the rest of factors are showed that atmosphere, services,
prices, and location of the restaurant take an important role on decision making as
well, but have less impact respectively. Moreover, there has only one factor that
could be categorized as the most important factor for choosing decision that is
“taste”, while the rest factors could be described as less important ones.

71
3 .what feeling do you expect from listening music in the luxury restaurant?
FEELING PERCENTAGE
Relaxing 72
Enjoying 12
Exciting 1.9
Others 0.1

RELAXING
ENJOYING
EXCITING
OTHERS

INTERPRETATION

From the above data it can be interpreted that most of the respondents i.e. 72%,
expect that the restaurants are supposed to have relaxing music, 12 %expects it to
be enjoying, 1.9% feels that it should be exciting and rest doesn’t consider it.

72
4. In your opinion, what are the important elements of atmosphere in the luxury
restaurant?
5 (The most) - 1 (The least)
ELEMENTS PERCENTAGE
Color 09
Scent 21
Music 32
layout 48

color
scent
music
layout

INTERPRETATION

From the above data, it can be interpreted that layout i.e. the seating arrangement
and music seems to be considered much more than color and scent or aroma of the
restaurants. Therefore, 48%respondents gave preference to layout, 32 %music
while color & scent preference is 9% and 21% only

73
5 .Does favorable atmosphere in restaurant can influence you to pay more or
revisiting?

INFLUENCE PERCENTAGE
YES 38
NO 12
Only want to revisit but not want to pay 60
more

YES

NO

INTERPRETATION

From the above, it can be interpreted that 38%respondents are willing to revisit or
pay more if they find atmosphere of the restaurant favorable to them, while 12
%respondents are not and 60 % respondents are not willing to revisit but not
willing to spend any extra money.

74
 6. Do you think color of the restaurant can affect your decision?
PERCENTAGE
Yes 32
No 15.4
May be 52.6

YES
NO
MAY BE

INTERPRETATION

From the above data, it can be interpreted that 32 % respondents feel that using of

colors also have an impact of consumer decision of choosing the restaurant while

15.4 % don’t consider it and 52.6 % respondents may consider it as a parameter to

take their final decision.

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7. Does the scent of food (smell) in restaurant motivate you to choosing restaurant

without plan?

PERCENTAGE

always 88
often 10.1
sometimes 0.9
never 0

100

90

80

70

60

50

40

30

20

10

0
ALWAYS OFTEN SOMETIMES NEVER

INTERPRETATION
From the above data, it can be interpreted that smell do plays an important role in
motivating the consumer to make their decision for visit or revisiting the
restaurant. Thus, 88% respondents always consider 10.1% often and 0.9%
sometimes.

76
 8. Rate (5 – the most & 1- the least) the ambiance preference of the restaurant.

ELEMENTS PERCENTAGE
cleanliness 72
lighting 04
Music 02
comfort 22

CLEANLINESS
LIGHTING
MUSIC
COMFORT

INTERPRETATION

From the data, it can be interpreted that cleanliness, hygiene and comfort are the
important parameter that a consumer prefers in its ambience therefore 72 %rated it
the most while lightning 4 % and music 2 %are considered comparatively less.

77
9. Does the scent of food (smell) in restaurant motivate you to choosing restaurant

without plan?

PERCENTAGE
ALWAYS 08
OFTEN 19
SOMETIMES 65
NEVER 08

ALWAYS
OFTEN
SOMETIMES
NEVER

INTERPRETATION
From this question, the result showed that using of scent or smell by restaurant is
not always having an effective response from customers. However, it sometimes
having an effective result on attracting customer by the scent of the meal in the
restaurant by chance, sometimes, which is 65 per cent, as showed at figure.

78
10. Do you think the sensory marketing likes scent, vision, and sound in

restaurants can influence you to pay more and become loyalty with those places?

PERCENTAGE
STRONGLY DISAGREE 0
DISAGREE 3.6
NEUTRAL 42.2
AGREE 53.4
STRONGLY AGREE 10.8

60

50

40

30

20

10

0
STRONGLY DISAGREE NEUTRAL AGREE STRONGLY AGREE
DISAGREE

INTERPRETATION
This is the general question that can bring the useful answer for others question,
the result show that most of respondents have experience with sensory marketing
activities like scent, sound, and color in the hotel. And only 3.6 % % who can’t
remember that they experience with these activities, which showed as following
figure.

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 FINDINGS OF DATA

 From the survey, it was found that 59.8% respondents visit restaurants at
least one a week, 22.2 %respondents twice a week, 13.6 % thrice & 6.4%
more than that. This can imply that respondents tend to going to have a meal
outside the house at restaurant at least one time per week.
 This result showed that the most important factor is the taste on the dish of
restaurant which has showed in the most important rate (the most valuable in
terms of percentage). While the rest of factors are showed that atmosphere,
services, prices, and location of the restaurant take an important role on
decision making as well, but have less impact respectively. Moreover, there
has only one factor that could be categorized as the most important factor for
choosing decision that is “taste”, while the rest factors could be described as
less important ones.
 It can be interpreted that most of the respondents i.e. 72%, expect that the
restaurants are supposed to have relaxing music, 12 %expects it to be
enjoying, 1.9% feels that it should be exciting and rest doesn’t consider it.
 38%respondents are willing to revisit or pay more if they find atmosphere of
the restaurant favorable to them, while 12 %respondents are not and 60 %
respondents are not willing to revisit but not willing to spend any extra
money

 32 % respondents feel that using of colors also have an impact of consumer

decision of choosing the restaurant while 15.4 % don’t consider it and 52.6
% respondents may consider it as a parameter to take their final decision.
80
 It can be interpreted that smell do plays an important role in motivating the
consumer to make their decision for visit or revisiting the restaurant. Thus,
88% respondents always consider 10.1% often and 0.9% sometimes
 Cleanliness, hygiene and comfort are the important parameter that a
consumer prefers in its ambience therefore 72 %rated it the most while
lightning 4 % and music 2 %are considered comparatively less.
 The result showed that using of scent or smell by restaurant is not always
having an effective response from customers. However, it sometimes having
an effective result on attracting customer by the scent of the meal in the
restaurant by chance, sometimes, which is 65 per cent.
 The general question that can bring the useful answer for others question,
the result show that most of respondents have experience with sensory
marketing activities like scent, sound, and color in the hotel. And only 3.6 %
% who can’t remember that they experience with these activities.

81
 CHAPTER 5

CONCLUSION AND RECOMMENDATIONS

82
 CONCLUSIONS

The sensory marketing impact on customer behavior In order to analysis customer

response to marketing strategy, from the result of our surveys, we found that

customer who has experience with sensory marketing in restaurants exhibits

Cognitive response, Emotional response, and Behavioral response. We can

illustrate the relationship between the result and the conceptual framework as

following:

 Cognitive response - the cognitive response is the response in form of

expectations, perceptions, attitude, and quality evaluation that customer
perceive from the sensory marketing activities. In these aspects, we set
several question to study it. From the result, we found that customer who
have experienced with activities like scents, sound and vision in hotel and
restaurant have response toward the cognitive thinking process. They have
the expectation regarding to the sensory activities that it is necessary for
service industry nowadays and it can bring the favorable attitude to the
customer. Regarding to the finding of its senses impact to cognitive
response, Therefore, the sensory marketing in restaurant seem to play an
essential role in order to measure quality of the business in customer
perspective as well.
According to the result of our survey, it shows that atmosphere plays as an
important factor that respondents use to choosing restaurant.
 Emotional response – moods, feeling, and emotion of the customer are
affected directly by the stimuli. From all of these, we found that people
83
 seem to have positive moods toward the sensory marketing activities in
restaurant. Scent marketing seems to be the most powerful since its scent
has influence customer emotions efficiently. In the restaurant industry, we
found that testing and smelling are nearly the same perception process of
customer. In general, the restaurants often use blue color to calm and relax
the customer.
 Behavioral response – as marketer using sensory marketing as tool to
increase performance of business, this response seem to be the most
important for the business. The responses of customer such as stay longer in
restaurant, spending more, revisiting. After we study , we found that sensory
marketing can influence them to create behavioral response in different way
as following:
Music – according to study, we found that slow tempo can influence on
spending of both time and money of customer. Moreover, in restaurant it
was found that the fast tempo music can increase the consumption speed
and the pleasant music can result into stronger purchase intention
Scents – smell seem to be very powerful sense to influence emotion of
customer directly. In term of behavioral response, the arousal scents of food
could motivate customer to have biogenic drive to buy food but in
restaurant, marketer usually use scent in order to create the favorable
atmosphere. Scents are use as supportive tool with the music to enhance
experience of customer.
Vision – From the survey, we found that using color solely cannot influence
customer behavior to create behavioral response. In restaurant, red color is
use to causes anxiety. By the way, in order to create desired atmosphere,
several research claim that a warm – color environment has shown to be
more effective by the result show that customer will feel relax and warm
84
that can bring the behavioral response in term of staying longer and create
opportunity to spending more.
Consequently, these facts bring us to the conclusion that all activities are
required to work together consistently in order to create favorable
atmosphere. Due to the reasons that in there are association among each
sensory marketing activities and different sensory stimuli can complement
another so that the favorable atmosphere can be contributed by using
sensory marketing activities together and it also require the consistency and
fitting among those activities to achieve the better performance.

85
RECOMMENDATION FOR ENTERPRENEURS

As our strategic question that to find the appropriate approach to applied sensory
marketing activities in restaurant in, from the result of the study comprise with our
analysis, we can give the recommendation for the entrepreneur who would like to
apply sensory marketing activities in order to improve their performance of the
business by considering on the critical factor regarding to the using of sensory
marketing and affect to consumer behavior . As the inference show that after using
sensory marketing activities in the business, the marketer should concerned about
the primary variable of their target group such as, demographic, culture, norms,
and general attitude about senses. Due to the reason that there are differences in
attitude and perspective in each culture. Moreover, the marketer should focuses on
the target’s group perspective about the definition of favorable atmosphere. This
would help the marketer to have a well understanding of customer behavior and
attitude that could bring to the exact solution to achieve the goal of business.
Furthermore, due to the reason that each senses likes scent, sound, and vision
cannot work effective when it work separately. Hence, it is necessary for the
marketer to understand how to use it with the consistency and combine it in order
to contribute the favorable combination of all activities. For example, the slow
tempo of background music in hotel and restaurant can bring the powerful impact
to the consumer behavior if using with appropriate color and scents. This
relationship between each sense could put the significant motivation to customer if
it is used in the suitable way. According to the result, customer believes that the
relaxing emotion is the primary expectation from the favorable atmosphere in
restaurant and aroma scent also plays as an essential element to motivate customer
in hotel. So, this fact could be the useful guideline for the marketer who aims to
create the favorable atmosphere in hotel and restaurant in Thailand with the
86
promotional tool likes sensory marketing activities. Consequently, in order to
create the effective tool to enhance the performance of the business by using
sensory marketing activities in hotel and restaurant in Thailand, the marketer
should concerned the critical factors that consist of, demographic, psychographic,
culture and subculture, norms, and general perspective of their target group.
Furthermore, the consistency of using several sensory marketing activities also
have the significant factor that the marketer should take it to consideration in order
to achieve its goal.

RECOMMENDATION FOR FUTURE RESEARCH

Future researchers are advised to collect the responses from consumers through
qualitative as well as quantitative researches to know more about the influence of
these variables on the consumer behavior.
This study was limited to Kanpur city only. Future research should cover either
whole country or significant number of large and small cities to have a broader
outlook of consumer behavior in India. Future research should be conducted using
a relatively large sample.

87
 LIMITATIONS OF THE STUDY

The following limitations can be pointed out from the research

 The sample size chosen for the questionnaire was only 100 and that may not

represent the true picture of the consumer perception about the restaurants

industry.

 The research got confined to the city of Kanpur district only. The respondent

belonged only to Kanpur and not others who were out of Kanpur.

 The selection of people for the questionnaire will be done on the basis of

random sampling.

 Resource Constraint

 Time Constraint

88
 BIBLIOGRAPHY

 Articles

 Aaker, D.A., (1996). Measuring brand equity across products and

markets. California Management Review, 38(3), 102-20. Bellizzi, J.

A., Crowley, A. E., & Hasty, R. W. (1983).

 Bellizzi, J. A., & Hite, R. E., (1992). Environmental Colour:

Consumer Feeling and Purchase Likelihodd. Psychology &

Marketing, 9 (5), 347 – 363. Bello, D.C., & Holbrook, M.B., (1995).

 Bitner, M.J., (1992). Servicescapes: the impact of physical

surroundings on customers and employees. Journal of Marketing, 56,

April, 57-71.

 Milliman, R. E., (1982). Using Background Music to Affect the

Behaviour of Supermarket Shoppers. Journal of Marketing, 46, 86 –

91.

 Skandrani, H., Mouelhi, N.B.D., & Malek, F., (2011). Effect of store

atmospherics on employees’ reactions. International Journal of Retail

& Distribution Management, 39(1), 51-67

89
 Xu, J.B., & Chan, A., (2010). A conceptual framework of hotel

experience and customerbased brand equity. International Journal of

Contemporary Hospitality Management, 22(2), 174-193. Yalch, R. F.,

(1993).

 BOOKS

 Consumerbehaviour(Schiffman/Kumar)

 KothariR.C ,Research methodology ,new age international,second

edition,2004

 WEBSITES

 www.researchgate.com

 www.busineesmanagement.com

 www.businessworld.com

90
 QUESTIONNARIE
DECLARATION: Purely for academic purpose.
A) PERSONAL INFORMATION
NAME
GENDER
AGE (IN YRS)
 Below 18
 18-35
 35-50
 Above 50

OCCUPATION
INCOME

B ) QUESTIONS

1. How often you go to restaurant per week?

o 0-1
o 2
o 3
o More than 5 times

2. Rate ( 5 – the most & 1- the least ) the attributes that would come up to your
mind while choosing the restaurants
o Taste
o Service
o Atmosphere
91
 o Price
o Location

3. In your opinion, what feeling do you expect from listening music in the luxury
restaurant?
o Relaxing
o Enjoying
o Exciting
o Others

4. In your opinion, what are the important elements of atmosphere in the luxury
restaurant?
5 (The most) - 1 (The least)

o Color
o Scent
o Music
o Layout (seating arrangement )

5 .Does favorable atmosphere in restaurant can influence you to pay more or

revisiting?
o Yes
o No
o Only want to revisit but not want to pay more

6. Do you think color of the restaurant can affect your decision?

o Yes
92
 o No
o Maybe

7. Does the scent of food (smell) in restaurant motivate you to choosing restaurant

without plan?

o Always

o Often

o Sometime

o Never

9. Rate (5 – the most & 1- the least) the ambiance preference of the restaurant.

o Cleanliness

o Lightning

o Music

o Comfort

10. Does the scent of food (smell) in restaurant motivate you to choosing restaurant

without plan?

o Always

o Often

o Sometime

o Never

93
11. Do you think the sensory marketing likes scent, vision, and sound in

restaurants can influence you to pay more and become loyalty with those places?

o Yes

o No

o Sometimes

94