McSegments

By Alejandra Leon

When Ray Kroc took over a restaurant business from the McDonald brothers, he realized that kids were his target market.

No sooner had Kroc acquired the company than Ronald McDonald the clown was brought in to attract children to his restaurants. His insight would result in the creation of a billion dollar empire.

Kroc’s genius is that he understood his audience and identified the two main segments that would drive his business: working- and middle-class children and their parents.

The company has come a long way since the days of Ray Kroc. The global fast food giant has grown immensely over the decades thanks in part to its unique targeting ability and innovative implementation tactics.

An example of this was the launch in 1979 of Happy Meal in the United States. The meal-plus-toy packaging was an instant hit that became an American icon and still accounts for a large percentage of all McDonald’s meals sold today.

Following an IMC approach, McDonald's has gotten to know its customers and has built its advertising strategy around it. The company knows that by targeting families, it’s tapping into one of the most attractive consumer groups. As marketing and brand strategist Martin Lindstrom states: “It gets into the parents' wallets via the kids' minds.”

Though very effective, McSegmentation has become the focus of controversy regarding the company’s targeting efforts. The fact that children play such an important role in the purchasing decision has raised many questions concerning the ethical repercussions and regulations of targeting and advertising to children.

There are several reasons why McDonald’s is the number one fast food restaurant in the world, and as stated above, a very important one has been its ability to understand its customers, segment them and reach the heart of its targets. Whether the company should or shouldn’t be allowed to continue pursuing children is still up for debate.

Should children be the main consumer target for companies?

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Alejandra Leon is a blogger at Vitamin IMC and a student in the Masters in Integrated Marketing Communications program at Northwestern University's Medill School. She isn't ashamed to admit that she finds comfort in a McNuggets meal to brighten a hard day. Alejandra can be reached at alejandraleon2010@u.northwestern.edu.

Ketchup in their veins

By Pooja Ranganathan

IMC ’01 alum Becca Martin was on campus at Medill last week to give a presentation about the marketing communications functions at McDonald’s. As the senior communications manager, Becca handles projects with McDonald’s’ internal communications initiative. This is a massive enterprise as the company has nearly 1.3 million employees worldwide.

McDonald’s work culture is built on the credos of being relationship-focused, entrepreneurial, and having an attitude they call “ketchup in our veins.” This phrase connotes the high level of employee involvement with the McDonald’s brand – they “eat, sleep, and breathe McDonald’s.”

The most significant approach to achieve this company culture is through open channels of communication – McDonald’s “Plan to Win” global strategy is shared with all of its employees so they are aligned on the company’s strategic direction. Other initiatives include the Access MCD website, an online resource for employees that addresses business-related topics in a conversational way. It features a “Have you ever been asked?” section that gives employees tips on how to field frequently asked questions about McDonald’s, like “Are Chicken McNuggets made with real meat?”

McDonald’s closes its feedback loop with surveys administered after running major communication initiatives. With this, they measure the efficacy of the program with respect to achievement of intended effects.

At IMC, we are all about measurement. Eric Ries’ post on “vanity metrics” recommends that all metrics be actionable, accessible, and auditable. In IMC we try to tie our metrics back to sales and profits. McDonald’s uses surveys to measure awareness, attitude, and other similar parameters within their communications functions. How actionable are these?

Taking things a step further – if these are the metrics for internal communication, how does McDonald’s measure the effect of communication targeted at the consumer? As a player in the retail segment, there cannot be a shortage of data available to the company. There is fascinating potential for McDonald’s to analyze customer behavior and use insights derived in communication strategies.

Does McDonald's communication demonstrate a deep understanding of their customers? How could they do better?

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Pooja Ranganathan is a blogger at Vitamin IMC and a student in the Masters in Integrated Marketing Communications program at Northwestern University's Medill School. She is now wondering what information McDonald's will get about her if she uses the promotional gift card she was given at this talk. She can be reached at PoojaRanganathan2010@u.northwestern.edu.

Coffee Wars Development: Battle of the Blitz

McDonald's launched a marketing blitz today aimed at taking market share away from Starbucks through its line of McCafe drinks. The multi-channel campaign features TV and print spots with online components of a microsite and Twitter feed.  

Starbucks prepared for this battle by rolling out full page ads in this past Sunday's New York Times. The ads aim to reinforce the premium quality of Starbucks coffee and move consumer perceptions away from coffee as a commodity.

Price is McDonald's weapon which will be hard for Starbucks to overcome. They can really only hope that haven't permanently damaged their brand by introducing Via instant coffee in weak attempt to get down to their competitors levels - earnings tumbled 77% in the fiscal second quarter. This move might have proven to be its Achilles heel - McDonald's is entering the battle just as its opponent is slightly wounded.

Do you think the McBlitz will work? Will McDonald's emerge as the winner of this battle? Is Starbucks' brand tainted too much to ever regain market dominance?

--Stacy Cohen