Page 294 - Marketing Management

CREATING BRAND EQUITY | CHAPTER 9 271

Marketing Excellence help children with leukemia. Since then, it has expanded
into a global charity effort called Ronald McDonald House
Charities that strives to improve children’s lives, health,
>>McDonald’s and well-being through three major programs: Ronald
McDonald House, Ronald McDonald Family Room, and
Ronald McDonald Care Mobile.
McDonald’s aggressively expanded overseas
throughout the 1980s by adding locations throughout
Europe, Asia, the Philippines, and Malaysia. This rapid
expansion, however, led to many struggles during the
1990s and early 2000s. The company lost focus and di-
rection, expanding by as many as 2,000 new restaurants
a year. New employees weren’t trained fast or well
enough, all of which led to poor customer service and
dirtier restaurants. New competitors popped up and the
company acquired nonburger companies, Chipotle and
Boston Market (which were eventually sold in 2006 and
2007). Consumer tastes changed, and new products
McDonald’s is the world’s leading hamburger fast-food like pizza, the Arch Deluxe, and deli sandwiches failed to
chain, with over 32,000 restaurants in 118 countries. connect with consumers, as did tweaks to the current
More than 75 percent of McDonald’s restaurants are menu including multiple changes to the Big Mac special
owned and operated by franchisees, which decreases sauce. Jim Skinner, McDonald’s chief executive ex-
the risk associated with expansion and ensures long- plained, “We got distracted from the most important
term tenants for the company. McDonald’s serves thing: hot, high-quality food at a great value at the speed
58 million people each day and promises a simple, easy, and convenience of McDonald’s.”
and enjoyable food experience for its customers. In 2003, McDonald’s implemented a strategic effort
The history of the McDonald’s Corporation dates called the “Plan to Win.” The framework, which still exists
back to 1955 when Ray Kroc, a multimixer salesman, today, helped McDonald’s restaurants refocus on offering
franchised a hamburger restaurant from the McDonald a better, higher-quality consumer experience rather than a
brothers, named it McDonald’s, and offered simple foods quick and cheap fast-food option. The Plan to Win “play-
such as the famous 15 cent hamburger. Kroc helped de- book” provided strategic insight on how to improve on the
sign the building, which featured red and white sides and company’s 5 Ps—people, products, promotions, price,
a single golden arch to attract local attention. Ten years and place—yet allowed local restaurants to adapt to dif-
later, 700 McDonald’s restaurants existed around the ferent environments and cultures. For example, McDonald’s
country, and the brand was on its way to becoming a introduced a Bacon Roll breakfast sandwich in the United
household name. Kingdom, a premium M burger in France, and an egg,
During the 1960s and 1970s, Kroc led McDonald’s tomato, and pepper McPuff in China. Prices also varied
growth domestically and internationally while pushing the slightly across the United States to better reflect different
importance of quality, service, cleanliness, and value. The tastes in different regions.
menu expanded to include the Big Mac, Quarter Some food changes that helped turn the company
Pounder, Happy Meal, Filet-O-Fish, and breakfast items around included offering more chicken options as beef
like the Egg McMuffin. Kroc also understood early on that consumption started to decline, selling milk in a bottle in-
his core audience consisted of children and families. stead of a carton, and removing “Super Size” options af-
Therefore, he focused McDonald’s advertising efforts at ter the documentary Super Size Me targeted McDonald’s
these groups and introduced Ronald McDonald in 1965 and its link to obesity. McDonald’s responded to health
during a 60-second commercial. Soon, characters such trends and began offering premium salads as well as ap-
as Grimace, the Hamburgler, and Mayor McCheese ple slices instead of French fries in Happy Meals as well as
made their debut in McDonald’s advertising campaigns all-white-meat McNuggets. While many of the healthier
and helped lure children into its restaurants for simple, options targeted moms and held a premium price,
good-tasting food, and a fun experience. McDonald’s introduced the $1 menu at the same time,
It was also during this time that McDonald’s created which targeted the lower-income bracket and teenagers.
the Ronald McDonald House, which opened in 1974 to Other responses included improving drive-thru service