Introduction.
Great brands are not built overnight. However, all brands face tough times and there is no exception to this rule. It is the ability of the brand to come out fighting in the market place that decides whether the brand will continue to grow and prosper. McDonalds is one of the great brands we have chosen in this page. It is a truly global brand. It is present in almost all countries. In 2007, it was ranked 8 by IB/BW in terms of brand value. It missed MMG Brands top 10 rankings by a whisker.
What went wrong ?
In the five year period between 1998 to 2003, McDonalds was in big trouble. Its market capitalization fell by USD 12.2 billion. It was the period of dotcoms boom and bust. The last recession had set in and for the first time recession became a globally known issue though it has been occurring regularly. What was the problem ?
The main problem is health related. People who eat hamburgers and drink Coke or Pepsi are mostly young people. People in my age group will not be able to eat a Big Mac along with the all the chips. Such food is known as junk food. The major problem in USA is that majority of its young people are obese. It has become the single biggest issue for the US department for health. Who became the threats to McDonalds ? - Surprise, it is all the Moms of the world. I would rate the Moms as the most influential group in the globe. Everybody listens to their mothers. Fathers are considered as useless by all the children. McDonald had a real fight in its hands.
The Comeback Strategy.
The chain set out to appeal to moms. In the past five years, one-third of its 15,000 restaurants have been upgraded, and new premium-priced salads and chicken meals have been added. Fruit offerings such as apple slices have helped change its image -- it's now the USA's biggest wholesale buyer of apples. In 2006, McDonald's global brand value rose by a healthy 6%, and its market capitalization grew by $2 billion. The company took the mom-friendly message to a new level. McDonald's kicked off a global campaign tied in with the last Olympics that talks up the importance of exercise and nutrition, using such athletic role models as tennis stars Venus and Serena Williams.
The campaign ("It's what I eat and what I do...I'm lovin' it") includes TV ads, new packaging, and a series of Ronald McDonald videos teaching children how to eat well and stay active. Meanwhile, average restaurant sales are up to a record $2 million thanks to the premium-priced items.
Summary & Conclusion.
McDonalds became proactive and not reactive. Between 1998 to 2003, all its reactions were defensive and reactive trying to prove that its food was OK for the kids but Moms were not convinced. However, McDonalds came out with a solution. McDonalds should understand cultural sensitivities when it comes to food. It ran into big problem in India a few years ago, because it used beef fat for preparation of its offerings. Hindus do not eat beef and it is forbidden, just like Muslims do not eat pork. As a result, many Indians do not trust it. The 'Sepoy Mutiny' against the British rule in India started because of this problem. If a brand wants to be truly global, it must respect the local culture.
© Copyright, Aug 19-08 . Without prejudice. All rights reserved
Brand Fight back The Case of McDonalds - To learn more about this author, visit Madhavan T Gopalachary's Website.
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Madhavan T Gopalachary
(Visit Madhavan's Website)
Madhavan Gopalachary, nick name "madgopes"
(g pronounced as in go) given by IIT
classmates, is a Mechanical Engineer and
an alumnus of Indian Institute of
Technology, Madras having passed out
specializing in IC Engines &
Thermodynamics.
He has nearly 35 years of experience in
the Corporate World. He started off as a
trainee and handled sales, marketing,
manufacturing, product management, profit
center management, strategic planning and
corporate development including R & D in
various organizations and at various
levels before becoming a CEO. His last two
professional assignments were at CEO level
before embarking to start management
consultancy business on January 01, 1998.
He has worked for British, Swedish MNCs as
well as very large Indian business houses.
He has spent a large portion of his time
from June 1998 till date in East African
Countries practicing as an independent
Management Consultant.
More details can be obtained at the
following web sites:
mmg.name
/mtg.html;
mmgconsu
lting.biz/
Madhavan's articles can be accessed at www.madgopes.com
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