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Publicly-traded McDonald’s Corp. is the forerunner of the modern quick service restaurant industry. This owes much to Ray Kroc having bought the rights from the MacDonald brothers in 1955, upgrading and expanding on their “speedy service” and franchising a system for producing predictable, consistent food taste at affordable prices. Along the way, the chain developed high standards of service, cleanliness and the ineffable concept of value.
Pulling down a record $23 billion revenue last year (2007 Annual Report, 20), McDonald’s leads the branded quick-service restaurant industry with 31,561 branches worldwide at last count (RLF Bargaining Report 2006, 3). Certainly, the chain has been aggressive about planting the flag in as many global markets, bringing its brand of casual dining to 115 countries presently and forging what McDonald’s claims is the leading position nearly everywhere.
Mainstream Marketing Strategy
For more than three decades since 1955, McDonald’s had a clear run of expansion in the United States and globally. There was, it seemed, no end to the customer interest that the combination of American casual-dining staples, a colorful ambience, sanitation, quick service, family-oriented advertising, and drive-thru, take-out and delivery options could take the chain.
But times change. The great cohort of post-war “baby boomer” consumers had reached middle-age or neared retirement. At this stage in their lives, obesity, adult-onset diabetes and cardiovascular diseases forced a re-thinking of fast food diets high in fat, sugar and calories generally. As the industry leader, McDonald’s was hardest hit. Perhaps the most prominent nail in the coffin, so to speak, was the 2002 documentary, “Supersize Me”, which brought home the awful lesson of what a diet comprising solely McDonald’s food could do to one’s health. To its credit, the chain has always invested a great deal on listening to its customers, chiefly via regular consumer surveys. Hence, the appearance of “healthier” dining options such as Apple Dippers, salad and diet Coke on the menu.
The once-famed standardized menu that enabled rapid turnaround and cost efficiency also did not withstand the inevitable consumer satiation, curiosity about new food types and idiosyncratic taste buds all over the world. Soon enough, the chain had to offer McChicken. In many Asian markets, spicy sauces and adaptations of local meals with rice have been fixtures for at least two decades now.
Revenue growth was also slowed by the inevitable shifts in dining and leisure preferences. The archetypal “Generation X had grown up and was as prone to socialize in Starbucks as in McDonald’s, for example. Hence, the introduction of McCafe and the urgency given to refurbishing the stores towards a more contemporary, classier look.
Instead of emphasizing pell-mell growth, therefore, corporate marketing strategy now emphasizes holding the line and providing a consistently superior customer experience with the theme, “being better, not just bigger.”
Place is a vital and permanent part of the McDonald’s marketing strategy. The chain is likely to have up to a dozen branches in some of the highest-traffic business and shopping centers everywhere: Manhanttan, Hong Kong, Makati (“Wall Street” of the Philippines), Ankara and the City in London. As a wag once said, the three most important factors for the fast food industry are “location, location and location”. Branches convenient to the target market are every bit as important as as an appealing menu, lifestyle and fun-oriented advertising, affordable prices (for the middle class anyway), and fast “grab and go” service. Around the U.S., the chain has no less than 13,700 branches.
In an intensely competitive industry, McDonald’s relies on advertising to communicate product introductions and, more importantly, to keep giving its audiences more reasons why they should return to the nearest branch. The latest campaign, “”I’m Loving it” is credited with turning around business at the chain (“McDonald’s USA CMO Bill Lamar Receives Chicago Advertising Federation Silver Medal Award; Outstanding Leadership Instrumental in the Successful “i’m lovin’ it” Campaign”, 2).
Typical of its family-oriented promotional vehicles was co-sponsorship of the movie “Shrek III” and leveraging the multiple merchandising opportunities this offered: Shrek logos on jugs of low-fat milk, a Shrek Web site where children could log personal sports and exercise activities for free downloads, Shrek Happy Meals containing sliced Apple Dippers, Chicken McNuggets and a toy, and a separate promotion for the Garden Fresh salad line (Adamy 2007, B-3).
The marketing mix, over the past few years, demonstrated a pronounced shift towards direct-response tools that included hyper-aggressive couponing, “street teams” to promote new products directly to customers and “healthy menu” posters in places like health clubs.
Turkey exemplifies a late market penetration by McDonald’s, when the chain already recognized the need to adapt to modify its “standard menu” to accommodate cultural and religious idiosyncrasies. Turkey may have the largest economy in the Middle East and stands out for being a secular nation as opposed to, for example, the unbending theocratic government that is Iran. Nonetheless, Turks are predominantly Muslims and the chain must therefore tread carefully lest its image as the frontrunner of American commercial imperialism and globalization rub local sensibilities the wrong way. There being suspected al Qaeda enclaves in the more remote upcountry areas, it comes as no surprise that inflamed Islamist sensitivities surfaced in bombing attacks against a couple of McDonald’s branches.
By the mid 1990s, Turkey had completed significant modernization of investment rules and incentives for foreign direct investors, becoming an even more promising developing country for foreign marketers. This became the entry point and subsequent rapid expansion of foreign fast-food franchise chains, especially McDonald’s and Burger King. Before then, hamburgers were widely available in local restaurants but they were not very popular. One observed therefore the Turkish case as another example of “McDonaldization”, the fascination with Western culture generally, as well as the rapid adoption of the total McDonald’s package of Western menu, new tastes, prompt service, cleanliness and standardized casual-dining ambience. The chain proved attractive to higher-income, youthful, trendy families (Kavak and Gumusluoglu 2006, 11). For some reason, women took a liking to McDonald’s more than men, who tended to remain with traditional (local) dining choices.
For all the changes being tested in America and the UK, McDonald’s in Turkey is still in the early-growth phase of its “product life cycle”. This is demonstrated by a customer base that is still largely upper-middle and upper-class, and by market adaptation largely confined to menu changes and promoting on national holidays. Otherwise, the advertising and promotional strategy remains the standard package decided out of Oak Brook (Illinois) headquarters.
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In Turkey, McDonald’s offers:
- The Turkish drink “Ayran” (a buttermilk drink made of yogurt, whipped into milk or plain cold water, lightly salted and served cold). It is a very popular drink all over country, typically served with kebabs, koftes, meat dishes and pilaf or drank by itself as a refreshment during the summer months since Ayran is always served cold.
- A hamburger with kebab (roast meat).
- Also on the menu is McTurco, much like the Snack Wraps already available in most North American and UK stores. This is like a Pita or flat, unleavened bread sandwich made of ice berg lettuce, tomato slices, burger patties, chicken or lamb slices (McDonald’s in Muslim Countries 2008, 1).
- “Tavuk” nuggets, an adaptation of the Turkish chicken pastry.
Being in the early-growth phase, McDonald’s marketing strategy in Turkey involves wholesale adoption of child-oriented promotions. Thus, the “happy Meal, always incorporating a colorful toy, is a mainstay of the Turk chain menu. The Turk franchise also took full advantage of the merchandising and promotional opportunities offered by the global co-op promotion with the “Shrek III” movie.
Adamy, Janet. 2007. “McDonald’s Puts Shrek on the Menu.” Wall Street Journal [New York, N.Y.] Eastern edition: B.3.
2007 Annual Report. McDonald’s Corp.
Kavak, Bahtisen & Gumusluoglu, Lale T. “Segmenting Food Markets: The Role Of Ethnocentrism And Lifestyle In Understanding Purchasing Intentions.” International Journal of Market Research Vol. 49, 1 (2007) 1-24.
“McDonald’s in Muslim Countries” 2008. Rob and Clare’s Travel Almanac. Web.
“McDonald’s USA CMO Bill Lamar Receives Chicago Advertising Federation Silver Medal Award; Outstanding Leadership Instrumental in the Successful “i’m lovin’ it” Campaign. ” PR Newswire 2007.
RLF Bargaining Report. 2006. Union of Shop, Distributive and Allied Workers. Web.