Marketing Channels and Methods — the New Svelte Shape of McDonald’s
Objectives & Mission Statement
Although McDonald’s latest advertising slogan, as proclaimed on its 2005 website, is “I’m lovin’ it,” (McDonald’s Official Website, 2005), shareholders in the fast food company have not be equally enamored of its current stock performance and plummeting sales. (The Rogue Investor, 2005) Thus, the objectives of the new McDonald’s marketing campaign must be to undo some of the economic and public relations damage done to the company by the negative press generated by the success of Morgan Spurlock’s film ‘Supersize Me.’ Over the course of the year, McDonald’s wishes to gain a greater percentage of the revenue of the current fast food market than its most prominent burger-oriented competitors Wendy’s and Burger King. McDonald’s also wishes to gain some of the type of positive media as generated by the sandwich chain Subway. The Subway Diet has now become a buzzword for the ability to lose weight by eating moderate portions of healthy fast food. Yet McDonalds has been the target of a recent flood of lawsuits blaming the fast food giant for the nation’s widespread obesity. (News Target, 2004)
McDonald’s tried to combat the negative publicity of the Spurlock’s film by eliminating its ‘Super Sized’ menu. This public relations menu shift was problematic, as it seems as if the company was giving less food for the same amount of money, and thus less value to the fast food consumers coming to McDonald’s for an inexpensive as well as a familiar-tasting meal. Furthermore the company’s decision to de-supersize after “Supersize Me” seemed calculated rather than concerned about consumer’s health. In contrast to these public relations ploys, one woman, completely on her own free will named Merab Morgan lost thirty-seven pounds on a self-designed McDonald’s diet, just as Morgan Spurlock, the director of “Supersize Me,” gained weight and lost overall bodily fitness on his 4,000 calorie a day high fat diet. Morgan’s decision to do so was from personal health and taste, not out of the desire to help McDonald’s or to make a film. Thus, a new marketing campaign that adopts this ordinary housewife’s accomplishment into its use of a real story to generate revenue can be used to show that simply by making different choices at the same establishment, one can achieve different fitness goals — something that is true of a grocery store as well as an inexpensive fast food establishment. Morgan’s selection of “a combo consisting of a Quarter Pounder, side salad with balsamic vinaigrette dressing and large unsweetened iced tea,” with less than 500 calories and roughly 20 grams of fat,” stands in stark contrast to Spurlock’s choices (Bauman, 2005). The new Mission Statement of McDonald’s is simple — eat right, eat well at McDonald’s. The measurable success of the short-term campaign can be seen in the participation of the component games, whereby consumers will answer nutritional questions about McDonald’s foods and other food questions, in return for winning free foods the next time they visit the restaurant.
A consumer’s need, to say nothing of a human need, is defined as “a state of felt deprivation in a person” (Kotler, Chandler, Gibbs, & McColl 1999, p. 4) The most basic human needs are for food, clothing, warmth, and safety. Less physically oriented needs may be classified as psychological, such as the need to feel loved, to feel successful, or social, such as to feel a sense of belonging. Thus, by addressing a wide array of consumer needs, a more effective marketing campaign may be deployed. The consumer needs McDonald’s addresses currently, stressing that consumers are ‘loving’ McDonald’s food simply addresses need for sustenance. (McDonald’s Website, 2005) This is a need fairly low upon the hierarchy of needs as delineated by Abraham Maslow. Maslow’s needs are depicted as a pyramid order from highest to lowest, including physiological, safety, belongingness, esteem, and self-actualization needs. (Daft 1997, p. 530) (Perhaps the fact ‘I’m lovin’ it comes from a popular teen song touches tangentially upon some sense of belonging-ness.) The desire to lose weight touches upon the need for safety in the form of health concerns, as well as belongingness in terms of cultivating a more attractive appearance. It also increases belongingness by encouraging consumers to come more frequently to the store, participating in the McDonald’s positive atmosphere, hanging out with friends, and thus validates their sense of personal esteem, of making positive health and social choices and connections, and more able to deploy themselves through self-actualization into the world — by reaching a goal of weight loss. Merab Morgan’s image as an ordinary suburban housewife also is an affirmation of the realistic nature of the goal, as well as its life changing aspect.
Of course, McDonald’s is not the only fast food company on the market today. McDonald’s must not simply address the needs and wants of the McDonald’s consumer. It must also address the external or social influences created by McDonald’s competitors such as Wendy’s and Burger King. (Perreault & McCarthy 2000, p. 123) Burger King has recently disregarded conventional wisdom in the industry by deploying bigger and bigger burgers and other menu items, such as its new omelet sandwich. (Burger King Official Website, 2005) Wendy’s has attempted to expand its image beyond a mere ‘Burger Joint’ by offering fruit and salads, thus confusing its image with Subway, a non-burger competitor. McDonald’s new campaign allows it to retain its image as a fun place to have hamburgers, but in a healthy way, thus avoiding the excesses of Burger King, which simply promises consumers that it will do it ‘their way,’ even if their ways are currently detrimental to their health, while avoiding the image-diluting campaign of Wendy’s, which attempts to encroach into the sandwich market, yet still retaining burgers as its core product — a prescription for disaster for McDonald’s, a company which is branded as the Golden Arches of French Fries and the land of the Hamburgler. (McDonald’s, Official Website, 2005)
Today, there is a growing awareness that the food human beings eat on a daily basis affects long-term health. Americans do not want to sacrifice taste to eat right. Americans want to enjoy their favorite fast foods in a way that combines the basic tenets of a healthy diet: balance, variety and moderation. By following a pattern of moderate, balanced consumption at McDonald’s people who use McDonald’s products all over the world can continue to eat their favorite fast foods, even if they are high in fat, salt or sugars, by moderating their portion size and frequency. With Merab Morgan as living proof of the results, consumers’ interest in a fast food diet and health should garner a fairly high level of interest. (Bauman, 2005)
McDonald’s new ‘product’ will be the Merab Morgan personal diet, and to facilitate this, the McDonald’s company throughout the course of the year will give coupons for return visits, rather than stress larger and larger meals during singular visits. This is a realistic goal, given that it satisfies customer’s desires for value in a positive fashion. (Bauman, 2005) It is attainable, given that customers still love McDonald’s food, and that McDonald’s will continue to provide value and service to its customers. Also, it is well timed, given that consumers are working more hours, are increasingly beset by high expenses such as the price of fuel, and are eating more meals outside the home. It addresses thus physical, ‘safety’ (economic budgeting), needs, while also provides the psychological, social, and self-actualizing reinforcement of choosing to lose weight without feeling deprived. (Daft, 1997)
The diet service/’product’ is innovative, because it shows that with the correct management, even food that tastes good can be healthy — it is how one eats as well as what one eats that results in weight loss. Morgan’s strategy adapts portion control as its core much Weight Watchers, with McDonald’s ‘fun’ format that the entire family can take part in — incorporating promotional games about nutrition reinforces this component. Like Jenny Craig, the new diet strategy for the fast food chain stresses the value of prepackaged food for convenience and portion control, but not food that is self-consciously diet food. Thus it will embrace the best of McDonald’s old image, but not Rather than sell fruit and salads and veggie burgers like its competitor Wendy’s, which tends to cause consumers to ask ‘can’t I cut up an apple at home for less money than 4.99 for a salad,’ or increasing its stress upon larger meals, like Burger King (Official Website, 2005)
McDonald’s new ‘spin’ portion control, eliminating the larger items from its menu, targeting lesser immediate consumption, and focusing on encouraging returning customer visits, will be a unique strategy for a fast food company, but one which incorporates sound diet nutrition of ‘calories in balanced with calories expended.’ People can still diet beneath the Golden Arches stresses that it provides a unique service, that of burgers, but through its new promotional strategy that de-emphasizes big meals and stresses return foot traffic, does so in a healthy and portion controlled way. “What is the right strategy to follow in a highly competitive market in which demand is relatively flat?” stated one executive recently. “The answer for us is to identify what our niche is in the market. For us, it is producing … hamburgers.” Healthy hamburgers! (Collins, 2002) Stressing return traffic for those hamburgers is an acknowledgement that McDonald’s “fries and soda are where the fat [profit] margins really lie,” for fast food companies — but that does not have to mean fat consumers! (Munarriz, 2003)
A value proposition is a clear statement of the tangible results a customer gets from using a company’s products and services (Konrath, 2005). McDonald’s has always offered its customers financial value, in the form of cheap, tasty food. But now the value will be given to the customer in a way that is better for the customer’s physical as well as financial health.
Communications & Promotion
An integrated marketing communications, or IMC approach, involves “coordinating the various promotional elements and other marketing activities that communicate with a firm’s customers” (Belch & Belch 1999, p. 8). The image of an ordinary woman such as Morgan communicates the achievability of her weight loss goal without suffering the deprivation of the foods she desires, combined with value-saving coupons that attract McDonald’s customers, based upon past needs and the fun incentives of ‘nutritional’ games, will be an ideal form of seemingly uncalculated, grass-roots promotion of an ordinary woman’s personal achievement. The new campaign can become a positive, healthy promotion that the whole family can enjoy, that teaches something, promotes the product, and is image-enhancing for the company.
McDonald’s previous pricing strategy was that of a purely, famously value-based strategy (Marketing Teacher, 2005). The company’s aim was to attract a high volume of customers. McDonald’s maximized its revenue by encouraging customers to produce a large amount of inexpensive goods, such as starches and sugars, for a lower price than its competitors. This is called the “maximize quantity pricing strategy” (Net MBA, 2005). However, this purely value-driven philosophy for one-time customer visits has turned public opinion and even the food industry against McDonald’s, because of its stress on volume. Once, people came to McDonalds for value from the brand, now the brand has lost its cache, even while the pricing remains low in relation to competitors. The new diet plan will feature products that are lower or on par with the prices charged by the competition, like Wendy’s and Burger Kin. But it will not compete with these chains purely by selling a cheaper product; rather the focus of the company will shift from a stress on cheap quantities of food given to the customer on single visits to a stress on giving consumer value on return-visit basis.
From “target return” pricing, whereby a certain return profit on a single good is expected the company must stress a more subtle form of “value based” pricing with additional psychological elements of pricing. In the new promotion of the McDonald’s diet, coupons are bestowed upon a customer’s first visit in a way that gives them value for volume by offering them a discount on their next meal, switching from a cumulative quantity discount overall, where a consumer gains value from buying in immediate bulk, to a longer term quantity strategy (Net MBA, 2005)
The product’s new policy enables the ordinary McDonald’s consumer to gain the psychological value of being on a diet, combined with the satisfaction, convenience and economy eating fast food. Eat sensibly, and eat right, and McDonald’s will give you the means, this new policy will stress. This new policy emphasis stresses continued McDonald’s of regular consumers, but consumption over an extended period, thus stretching the customer’s calorie needs over a larger period than a day — a strategy of smaller portions employed by the first independent designer of the diet herself, Merab Morgan. Also, the creation of a game whereby individuals answer questions about McDonald’s food’s nutritional contents will create an added psychological incentive to return to the fast food establishment, so as to continue to play the game, make money. The company gains the long-term psychological advantage of showing that McDonald’s is upfront with its product’s ingredients and cares about the value its food can give to its customers, by decreasing bundle or bulk-based consumption on single visits, but making up for the lost volume of additionally purchased goods with higher rates of return traffic into its stores. The company shows through this new product policy that, contrary to the Spurlock film, it does care about its customers and is flexible to the needs of modern life, and that its products can be adapted into a nutrition-friendly lifestyle. (Bauman, 2005)
Channels of Distribution
One additional benefit for the company is that its network of distributing the goods need not change, rather the new campaign is promoted through a change of marketing, pricing, and allocating value from single to multiple trips. It is still hamburger-focused. (Munarriz, 2003) Thus, this is a strategy that can be deployed not just in America, but also in a wide variety of countries with different network channels of good distribution, except in developing and rural nations where frequent transportation to the chain may prove difficult.
Customer Relationship Management
Before, during the “Supersize Me,” debacle, McDonald’s decision to eliminate supersized menus was seen as calculated by many industry observers. By drawing upon a grass-roots campaign of Merab Morgan, McDonald’s can enhance its image, combined with still offering the customer taste and value. (Bauman, 2005)
Bauman, Valerie. (11 Aug 2005) “People try to lose weight at McDonalds.” AP Wire. Accessed on AOL on 22 Aug 2005 at http://aolsvc.news.aol.com/news/article.adp?id=20050811163009990002
Burger King. (2005) Official Website. Retrieved 11 Sept 2005 at http://www.haveityourway.com/
Collins, Luke. (2002) “Chips are down for Burger Giants” MCD: McDonald’s Corporation News and Articles. Retrieved 27 Aug 2005 at http://www.licenseenews.com/news/news134.html
Daft, R.L. (1997). Management. Fort Worth, TX: Dryden Press.
Konrath, Jill. (2005) “How to Write a Strong Value Proposition.” Sideroad. Retrieved 2 Sept 2005 at http://www.sideroad.com/Sales/value_proposition.html
Kotler, P., Armstrong, G., Brown, L, & Adam, S. (1998). Marketing. Englewood Cliffs, NJ: Prentice Hall.
Kotler, P., Chandler, P., Gibbs, R., & McColl, R. (1999). Marketing. Englewood Cliffs, NJ: Prentice Hall.
McDonald’s (2005) Official Website. Retrieved 22 Aug 2005 at http://www.mcdonalds.com / McDonald’s Official Website. (2005)
“McDonald’s Stock Quote.” (2005) The Rogue Investor http://www.rogueinvestor.com/dow_jones_30/mcdonalds_stock_information.html
Munarriz, Eric. “Burger Wars.” (2003) The Motley Fool.com Retrieved 27 Aug 2005 at http://www.fool.com/news/commentary/2003/commentary030407ram.htm
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News Target. (Apr 2004) “McDonald’s Stock Quote.” Retrieved 11 Sept 2005 at http://www.newstarget.com/000960.html
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