McDonald’s investor call on November 9 was filled with the usual investor talk about “growth” and “spending”, but the highlight for me was the shift to marketing psychobabble meant to convey some sort of growth-focused mindset shift due to changing consumption habits due to the pandemic.
The highlight was the new strategy called “Accelerating the Arches”. Which replaces the old strategy of “Velocity”.
What is interesting is the two truths that McDonald’s CEO Chris Kempczinski highlighted as the key to the new strategy’s success:
- Consumer needs have changed since the pandemic started.
- Customers are looking for purpose.
Let’s look at these two quickly:
Changing consumer tastes:
I mean, “Duh!”
Obviously people’s habits have changed tremendously.
Right now, across Europe, countries are shutting down again to stop the spread of the coronavirus.
In California, the state has tripped their emergency brake to try and halt uncontrolled spread in California.
The United States had over 170,000 new cases of the virus yesterday and there are lines for food banks in Texas that stretch for miles!
Obviously consumer tastes have changed.
In McDonald’s speak, this means that people aren’t eating out as much.
Why?
Because 80% of American consumers don’t feel safe doing things outside of their home, according to McKinsey.
Axios studied the US labor market and found that the real unemployment rate is probably somewhere around 26%.
So…yes, customers are changing their habits! But not for the reasons highlighted.
Are customers looking for purpose?
Professor Mark Ritson says that it isn’t purpose if it doesn’t cost you money.
So right up front, McDonald’s assures investors that they aren’t prioritizing “profit over purpose.”
It is good to know.
The research on the topic is always likely to be so convoluted that to get a clear answer on whether or not folks really buy purpose would be impossible.
Tom Roach wrote about this a few months back and his take on the topic is worth the read.
In general, there have been studies that point to the idea that at best brand purpose is a tie-breaker and at worst it is meaningless.
That doesn’t stop companies from trying to tie the idea of purpose to their job of selling burgers, computers, or cars.
In McDonald’s case, I’d think there own experience with the Cactus Jack meal deal would show that purpose matters less than affordability since a woman in Bed-Stuy mentioned that the Travis Scott meal was like a “cheat code” for affordability in a poor neighborhood.
3 keys to McDonald’s focus going forward:
As the call continued, Global CMO Alistar Macrow talked about the idea that McDonald’s wanted to focus on three things going forward through the pandemic:
- Better communications
- Giving customers familiarity
- Improving distribution
Or, if you are looking at it through the lens of marketing: 3 of the 4 Ps.
Does any of this matter?
It could but I’m not sure it will since the explanation was couched in highly dubious explanations for the tactics like “affinity”, telling stories, and highlighting values.
If I were in the driver’s seat of McDonald’s marketing right now…I’d approach it like this:
Regain customer focus:
What is obvious here is that McDonald’s has really lost touch with their market.
They are largely allowing themselves to be driven by advertising and sales orientations that are putting them in a position where they are flinging things against the wall to hope that something sticks.
Who is the customer you are targeting?
What do they need right now?
How can you provide value to them?
The Travis Scott case study seems like a happy accident, but it highlights a few good lessons.
The cheat code comment that people are looking for affordable meals being maybe the most important one.
Macrow says that “affordability” has always been a key attribute of the brand, but he tries to hide from it behind “stories”, “values”, and “advocacy”.
Dude!
Your customers are telling you loud and clear what they want, get out of your own way and listen to them.
They want affordable food, that they can get quickly, and, if the line at the McDonald’s drive-through near my house is any indication, safely because they are scared of getting sick.
Focus on getting your strategy right:
It is too early in the year to know whether or not this is going to be in the running for the end of the year marketing babble awards, but the call was filled with far too many buzz words, tactics, and BS to really generate too much hope on success.
Along with lacking an emphasis on the customer, from listening to the CEO and CMO, it sure felt like McDonald’s has no clue what they are really trying to achieve with their marketing efforts, outside of “making marketing a growth pillar”.
Spoiler: marketing is the growth pillar.
If your business isn’t growing, start with marketing because that’s where the money is!
To get this new focus correct, McDonald’s needs to get back to the basics of segmentation, targeting, and positioning.
Segment: what kinds of buying habits and buying patterns does your customer base have?
Target: pick some focuses for your marketing efforts. Kurt Vonnegut said something like, “if you throw open the window and try and make love to the world, you don’t get laid and you probably catch a