McDonald’s plans to recapture 'energy and excitement' in its marketing
McDonald’s slowing growth was brought into sharp focus yesterday (23 January) when it reported lower-than expected earnings in 2014. Despite the disappointing sales, the restaurant is defiant in its outlook for the next 12 months. The confidence is borne from faith in its five-pronged marketing plan based on insights, innovation, value, modernisation and quality.
It is also signalling a renewed focus on its lower priced products and breakfast menu to drive sales.
Speaking on a conference call shortly after revealing its latest earnings, the fast food chain’s chief executive Don Thompson claimed it had found the silver bullet to increasing new customer numbers. Upcoming 2014 menu and marketing strategies will better balance affordability with core products, new choices and limited time offers. This will be driven by deeper insights into the impact of non-traditional competitors such as cafés and bakeries, he explained.
Pete Bensen, chief financial officer at McDonald’s, added: “We are leveraging consumer insights to better understand how we can deliver on evolving consumer needs. This includes enhancing our value-based messaging and re-engaging with customers in more compelling ways from our marketing and promotions to the order points that are restaurants.”
He added: “We have got to get back to an energy and excitement in our marketing balance in the execution of [promoting high quality food]”.
The fast food chain has been focusing on value enhancements in Europe, where sales growth quickened for the full-year, which may be why executives are hopeful about matching that success in its struggling US, Japanese and German markets. The business said its marketing needed to be “pronounced” at promoting the brand as a kitchen and a restaurant that cooks and prepares fresh “high-quality food”. Future campaigns could push its restaurants’ ability to make customised sandwiches, it added.
Meanwhile, the company is planning to launch more premium products in a bid to recapture younger consumers moving to the likes of Starbucks and Chipotle. Underpinning this premiumisation strategy is a plan to “modernise” over 1,000 restaurants in targeted regions including 320 in Europe and 250 in the US.
Thompson said the business had “lost” the trust of customers in recent years by launching products that “mined” out additional profitability without having a strong customer benefit such as its McCafe range or fruit smoothies. Improvements to its menu and store layout are aimed at “getting closer and getting back” to a strong relationship with those lost diners, he added.
“One of the things we have all discussed is that we have got to really get back to a much stronger focus on what we call 5P execution. When we talked about the plan of win, people, product, place, price, promotion. Those five areas we have got to make sure that we’re maxing out our execution strategies for whatever initiative that we implement in any market around the world. That’s going to help us create that relevance again with our customer.”