McDonald’s looks to perfect global/local marketing recipe
McDonald’s is looking to better harmonise its global brand building with its local activations in-stores as it steps up efforts to find the right marketing blend needed to reignite sales.
Three layers of marketing - local co-ops, national and local store - are being recalibrated to crystalise the company’s response to intense competition and an unpopular menu. If a balance can be found then McDonald’s believes it would be able to differentiate its products and escape the price war that contributed to the worst year in three decades.
Global sales fell 1 per cent for the year and 9 per cent in the quarter, compounded by the company haemorrhaging customers in the US. Sales in its domestic market are predicted by Nation’s Restaurant News to have actually declined in 2014, marking the first annual decline.
Mike Andres, McDonald’s US president, told analysts on its fourth quarter earnings call (23 January) that a better balanced marketing strategy would help spark a turnaround.
“We are looking at a “revamped marketing approach that better coordinates the specific roles and deliverables of our co-op marketing plans using more sophisticated analytics and data to understand the best way to approach”, he said.
The restaurant has been relentless in its efforts to attract younger customers, pumping millions into expanding its menu to a point where it has become too bloated, he admitted. A better understanding of its local stores would allow it to shape menus to local tastes, an approach it has been testing in the US by giving some stores local Facebook pages.
Andres added: “We're also looking at our marketing approach and making sure that we're leveraging the power of the three layers of marketing.
“Certainly, our national messaging comes on top of it to help build our brand. We have a unique relationship with our customers and the recent advertising is rekindling that relationship in a way that we've been used to over the years, and we've enjoyed. And then, the local market aspect of it is that it's been our heritage, owner operators at McDonald's being the hub of their local communities, very important to our turnaround plan as well as to local marketing store, things that they're doing to combat the guy across the street from them, that's the key to that.”
The strategy serves as the foundation for brand’s quest for growth over the next 12 months. It is similar to the attempts employed by Mondelez and Coca-Cola to become more localised as they look to keep sales flowing amid tough economic conditions.
Chief executive Don Thompson said on the same call that 2015 would be a “year of regaining momentum”, a sign that the company believes its switch from product to customer-led marketing is the right approach. This is to be backed by technology’s growing presence in stores with the company recognising it has to catch-up to how people are using mobile devices if it is to match its convenience offering up to the value posed by fast casual players such as Chipotle and Nando’s.
Collectively, these changes create the McDonald’s “Experience of the Future”, said Thompson.
“It builds on the investments we’ve already made in technology, re-imaging our restaurants and operations improvement with an increased emphasis on tangible customer-centric innovations for menu and service to profitability grow the business.”