The Homa Files

TakeAway: Years ago when McDonald’s niche offerings to Hispanics on the west coast overperformed with the general market, the company realized it was on to something. 

Now, rather than develop ads and menu choices geared towards the broad, general market, McDonald’s has developed a strategy of appealing to minorities and hoping the message will catch on with a broader demographic. 

While this is a very different approach than most companies take, as the demographics of the U.S. continue to change, this strategy is sure to be copied. 

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Excerpted from Bloomberg Businessweek, “Ethnic Marketing: McDonald’s Is Loving It,” by Burt Helm, July 8, 2010

The music industry has long sold black culture to white Americans. Now McDonald’s is doing much the same. It’s taking cues from African Americans, Hispanics, and Asians to develop menus and advertising in the hopes of encouraging middle-class Caucasians to buy smoothies and snack wraps as avidly as they consume hip-hop and rock ‘n’ roll.

“The ethnic consumer tends to set trends,” says Neil Golden, McDonald’s U.S. chief marketing officer. “So they help set the tone for how we enter the marketplace.” Golden says preferences gleaned from minority consumers shape McDonald’s menu and ad choices, which are then marketed to all customers.

The fast-food giant’s strategy is a departure from the way companies typically market to American households. Usually, a company works with an agency to develop advertising aimed at the general market, then turns to boutique multicultural agencies to create versions tailored to blacks, Hispanics, or Asians. McDonald’s still creates ads specially tailored to minority groups, as it has for over 30 years, but minorities exert an increasingly influential role in its mainstream advertising as well. The company thinks they provide early exposure to new trends. …

Its low prices have helped fuel McDonald’s recent strong performance, even as the rest of the restaurant industry struggles to recover from the recession. But Golden says his minority-shapes-majority marketing strategy is paying off, too. U.S. sales rose 1.5 percent in the first three months of the year …

Golden says he first discovered how dramatically minority tastes can influence mainstream preferences when he oversaw McDonald’s marketing in the U.S. West in the 1990s. His team had developed products aimed at Hispanics called the “Fiesta Menu,” … “But [the Fiesta menu] overperformed in the general market.”

Golden went on to create a strategy for the U.S. business that he calls “Leading with Ethnic Insights.” … marketers are asked to imagine how they would sell a product if the U.S. population were only African American, Hispanic, or Asian. They look for differences to McDonald’s general market plan.

That sensitivity has already influenced new products. The fruit combinations in McDonald’s latest smoothies, for instance, reflect taste preferences in minority communities. And when the company started heavily advertising coffee drinks last year, the ads emphasized the indulgent aspects of sweeter drinks like mochas, a message that resonated with blacks, says Golden. …

Edit by DMG

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Full Article
http://www.businessweek.com/magazine/content/10_29/b4187022876832.htm

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This entry was posted on September 24, 2010 at 6:28 am and is filed under Mktg - Positioning, Mktg - Promotion. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.