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McDonald's offers new brand vision
McDonald's Corp. (NYSE:MCD - News) has a new corporate mission statement -- "our customers' favorite place and way to eat," a theme it wants advertising agencies to embrace, the company's global marketing chief said on Friday.
February 6, 2003
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ClaudeFriday February 7, 5:43 pm ETCHICAGO (Reuters) - McDonald's Corp. (NYSE:MCD - News) has a new corporate mission statement -- "our customers' favorite place and way to eat," a theme it wants advertising agencies to embrace, the company's global marketing chief said on Friday.But critics questioned whether any message from the hamburger giant will ring true for customers until it clarifies its strategy and fixes operational problems that have led to two years of worsening financial results and its first-ever quarterly loss. The mission statement was a key focus this week at a global advertising meeting at the company's Oak Brook, Illinois headquarters, where McDonald's challenged 14 of its biggest agencies from 10 major world markets to brainstorm new ideas. "This was a meeting about brand direction," Larry Light, McDonald's head of global marketing, told Reuters. Agencies at the unusual global meeting included Omnicom Group Inc.'s (NYSE:OMC - News) DBB Worldwide unit and Publicis Groupe's (Paris:PUBP.PA - News) Leo Burnett Worldwide. Light stressed that the meeting was not designed to pit agencies against each other, although they were permitted to watch each other present ideas. He declined to discuss decisions made at the meeting, but said McDonald's has no plans to develop a unified worldwide campaign. Instead, the company wants to reconnect with customers locally and is preparing to shift more resources toward local promotions. "We're going to reinvest in local store marketing," he said. "We are going to be passionately focused on the customer."REAL STRATEGY OR FRUSTRATING MESSAGE?But the advertising pow wow may spell frustration for big advertising agencies under pressure to generate new ads for McDonald's. Critics argue that McDonald's message and menu have been scattered. The company has embraced everything from Happy Meal promotions that de-emphasized food in favor of toys, to commercials featuring real estate mogul Donald Trump, while its mainstay fast-food offerings and service have suffered. A recent University of Michigan study suggested that McDonald's has among the lowest national ratings in U.S. fast food establishments for service and perceived quality of food. A much-heralded U.S. production system has yet to yield significant changes in a menu that is under fire for being outmoded and unhealthy. Meanwhile, new players to the market, such as fresh sandwich chain Panera Bread Co. (NasdaqNM:PNRA - News), are striking a welcome chord with consumers' changing tastes. McDonald's latest U.S. strategy features some of its premium sandwiches for a dollar, but a focus seeming to weigh too heavily on discounting threatens to diminish the quality associated with the brand, consultants said. And the discounted menu has been blamed for cutting into profits. "I don't think of them (McDonald's) as a place of 'firsts' nowadays," said Davis Masten of Cheskin, a brand consulting firm in California. Well-known ad campaigns like "McDonald's is Your Kind of Place," "You Deserve a Break Today," and the current "We Love to See You Smile," launched in 2000 by DDB Chicago, have touted the McDonald's experience. "I think that right now they have lost touch with what the customers want; it's not like it used to be," said Kamille Livingston, 30, a customer at a downtown Chicago McDonald's.TAIL WAGGING DOG?Such a highly publicized advertising summit may also be premature, marketing experts said, noting that it is common for companies to focus too much on advertising in times of financial stress. "It's backward," said Jack Trout, president of brand consulting firm Trout & Partners Ltd. and author of "Big Brands, Big Trouble." "It's the tail wagging the dog." McDonald's is among the largest worldwide advertisers with some 30,000 restaurants. It paid in excess of $600 million in 2001 for radio and television ads, according to a company filing. "I think people are as fearful as they are hopeful," said an insider at one of the company's U.S. agencies, who declined to be named. "There is concern. McDonald's is a huge client."Burnett and DDB, who like all the agencies at the meeting had to sign confidentiality agreements, declined to comment. Lawrence McNaughton, managing director of brand consultancy CoreBrand LLC, warns that the further McDonald's moves away from founder Ray Kroc's vision of consistent food and service, the more vulnerable its brand becomes.McDonald's brand is among the most recognized in the world, he said. It accounts for roughly 18 percent of the company's market capitalization, or about $3.8 billion through the fourth quarter, according to CoreBrand's calculations. New Chief Executive Jim Cantalupo has conceded that McDonald's must return to basics, and has committed to a company-wide review. He plans to adhere to some version of the discounting program, but only five weeks into the job, he has said little more about strategy. A longtime insider, Cantalupo returned from retirement late last year to take the top post after former Chief Executive Jack Greenberg resigned. Responding to industry criticism that McDonald's may see advertising as a panacea for its financial woes, marketing chief Light said: "This company is not going to be saved by an ad. We would be naive to think that any one thing is the answer."
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