Consumers are eating out less, and when they do, they’re choosing healthier fare than burgers washed down with super-sized jugs of cola accompanied by troughs of french fried potatoes. So what’s the world’s largest fast food chain to do? If you’re Larry Light, former global CMO of McDonald’s (MCD), you get back to basics.
The NYSE, on which McDonald’s stock is traded, has shrunk by more than 40% in the past year alone. Yet, during this same time period, McDonald’s stock is up almost 15%. So, what gives? Why would McDonald’s buck the trend despite a crumbling economy and increasingly health-conscious consumer audience?
At first blush, conventional wisdom might suggest that the Golden Arches’ relatively low-cost fare is becoming increasingly attractive to cash-strapped consumers eager to save money. Though sour economic conditions are likely to hurt McDonald’s significantly less than many other higher-end restaurant chains, the New York Times published an article last week that suggests that McDonald’s return to the basics - customer research and the development of solid products - is the more likely reason behind its recent success.
In fact, Larry Light and veteran McDonald’s exec James Cantalupo returned to a basic set of evaluative tools used by marketers every day – the four P’s of the traditional marketing mix – in a document they refer to as their “Plan to Win”. (Although, in McDonald’s case, they add ‘people’ to the traditional product, price, place and promotion, and therefore call it the 5 P’s).
From the New York Times:
“While the five P’s smack of corny corporate speak, company officials maintain that they profoundly changed the direction of McDonald’s and have given employees — from the chief executive to the store manager — a framework for prioritizing what they do.”
McDonald’s did the research and repaired their product line, adding more chicken entrees because that’s what consumers were buying. They determined that pricing was less of an issue for them than their distribution model was (staying open later, making drive-throughs easier to navigate), and finally, they developed a simple yet effective promotion strategy to announce their revamped menu.
That’s it – that’s what the marketing mix is all about. A return to the basics of learning from your customers to develop the products they want, backed up by research into what segment of the market you aim to serve, a simple, effective distribution system, and clear messaging and communication to inform customers of the changes you’ve made based on their feedback.
Corny indeed.
