Is America running on McCafe?

During these challenging economic times, no, especially during these trying times it’s always nice to be able to point to moments of brilliance.  When it comes to marketing McDonald’s has set the standard.  While most marketers continue their obsession with letting media planners and creative directors dictate their marketing strategies, the Golden Arches continues to operate like it has enshrined the Four P’s.

Product – Whatever you may think of McDonald’s food, it has succeeded on the product front.  McD’s has succeeded because it’s aimed for quality control, and in the consumers’ mind it’s all about consistency.  Most consumers reward McD’s NOT because they sell Capital-Grille-style hamburgers but because their food quality is generally CONSISTENT–most people hate surprises.  But marketers also have to be innovative, and smartly engage in new product development without sacrificing their core competencies.  McD’s expansion into fancy coffees seems to be winning new customers.  BIG Research recently reported that while Starbucks remains as consumers’ favorite coffee spot, McDonald’s has now replaced Dunkin’ for second place.  And McCafe reportedly contributed to McD’s 2.8% increase in US sales in May.

Price – It would be very easy to attribute the Golden Arches’ success entirely to its “dollar menu” but that would miss most of the story.  McD’s success results from a precision-based, comprehensive pricing strategy.  So, while it’s dollar menu contributes massively to overall sales, it has recently been rewarded with improved profits stemming from consumers who are willing to pay for its higher-margin menu items like Big Macs.  There’s nothing like having a diversified pricing stategy for an increasingly diverse consumer base.  Pricing can make or break brands.  It took Miller beer some years before it recovered from committing one of the cardinal sins of pricing strategy: engaging the category leader in a price war (in 1997)–Budweiser had a field day, swatted the pesky Miller, and grew the market share gap between it and Miller.

Place – This is what I believe really sets McD’s apart from its direct competitors as well as from companies in other categories.  While most franchise-based companies have been hamstrung by their incompetent management of its franchisees, McD’s sales success is directly related to its sound relations with its franchisees.  To be sure, there have been a few hiccups–franchise operators took a bit longer to swallow the $100,000 McCafe machinery investment, but McD’s historic treatment of franchisees as real marketing partners has paid off nicely.  No fast-food competitor comes close.  And McD’s went further, moving decisively to ensure its franchise network was well-represented ethnically–some of its most prominent and successful franchisees in LA and NY are Latino.

Promotion – What more can you say about a Master Marketer?  And for most of the readers of this site, McD’s is part of a handful of companies that really get it when it comes to multicultural, ethnic, Hispanic, Asian and African-American marketing.  But you see, you’re a Master Marketer because multicultural is in your DNA–and yes, also in your executive leadership.  You really have to admire a marketer whose mantra on marketing is to imbue its advertising strategy with a key ethnic consumer insight–what a concept!  It is for this reason that you get an English-language McD TV spot (recently cited in an NBC Today segment on Hispanic influence on American pop culture) that features a Latina with an obvious Hispanic accent.  It’s not just about celebrating Hispanic culture but about celebrating it within the American universe.

To my fellow marketers, before we go in pursuit of the ideal agency partner, let’s make sure we have our internal house in order–a house that fully embraces the Four P’s.  And yes, let’s not go on an endless search for benchmarks, just look for the “Golden” standard.